News | EU & Competition

Wednesday 23rd January 2008

SJ Berwin advised Universal Music Group in its successful defence of competition proceedings brought by the European Commission against Universal, other music  majors and Apple/iTunes over the way iTunes operates separate online stores in different European countries and varies the price of music downloads across some of its stores.

The case raised complex issues concerning the interaction of competition and copyright rules under EC law in the fast-developing sector of online music sales. The Commission sought to reduce the scope of copyright in this area and threatened to impose heavy fines on the parties. Following Universal's defence (and the defence of Apple and the other music majors) the European Commission announced on 9 January 2008 that it would take no further action in this case and close its file.

The case was started in 2005 by a complaint by the UK Consumers' Association (trading as Which?) to the Office of Fair Trading which alleged that the practice of Apple's UK iTunes site to charge higher prices for music downloads than its other sites in the Euro-zone area was in breach of UK and EU competition laws.  The Office of Fair Trading referred the matter to the European Commission.  In addition to the pricing concerns raised by Which?, the Commission objected to the fact that iTunes' national music services in Europe limit permanent digital downloads of music to customers with a credit card issued in the country of the online store.

In March 2007, the Commission issued a Statement of Objections to Apple and all major recorded music companies (all of which make their music available to iTunes in the EU) alleging that the territorial restrictions operated by iTunes' stores in Europe were the result of anti-competitive agreements between Apple and the music majors in breach of Article 81 of the EC Treaty.  Following detailed submissions by the parties, the Commission decided to abandon its case.

Apple's decision to adjust its pricing policy for its UK iTunes store is a unilateral decision and not the result of any remedy imposed by the Commission. The fact that the Commission dropped its case is a clear indication that the Commission had to accept that the nature of copyright and related rights remains essentially national in nature both in the physical as well as in the online world.

General Counsel of Universal Music Group, Richard Constant commented 'The Commission's decision to close this high profile case is a significant victory for copyright holders and in particular the music industry in Europe.  We were delighted with the extremely effective defence mounted by SJ Berwin for the music industry as a whole.'

Stephen Kon and Philipp Girardet of SJ Berwin LLP acted for Universal Music Group in this case.

For further information please contact:

Stephen Kon on +44 (0)20 7111 2237, email Stephen.Kon@sjberwin.com, Philipp Girardet on +44 (0)20 7111 2055, email Philipp.Girardet@sjberwin.com or Dorota Wozniak on +44 (0)20 7111 5066, email Dorota.Wozniak@sjberwin.com.

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• SJ Berwin’s EU and Competition department has been a core practice area of the firm since its establishment. The department is widely recognised as one of the leading practices in EU regulatory and competition law, operating from Brussels, London, Madrid, Milan, Munich and Paris. Three times voted ‘Competition Team of the Year’ in the UK Legal Business Awards, the team regularly features in the Global Competition Review’s ‘GCR 100’, a survey of the world’s leading competition practices.
  
  
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