Anti-Apple EU action over competition not clear cut

Posted on 15 Jun 2006 at 10:57

Legal opinion appears to be divided over whether the European Commission will tackle Apple for alleged anti-competitive practices.

While individual countries have raised concerns about Apple's refusal to allow devices other than its own iPods to play songs downloaded from the iTunes Music Store, the EU has so far kept its counsel. The reason, suggests Bernhard Warner, Columnist at The Times Online, is that the EU may not yet have grounds for an investigation.

'EU competition law is built around one basic point: a company is using its dominant position to move into new markets and dominate those, and, exclude rivals from entering these markets,' he writes.

'The phrasing "dominant position" is the key,' he says. 'Regulators are loath to enter into an investigation if it is deemed the market in question is not fully mature for fear of trampling on innovation and natural market forces.'

Certainly the market is far from mature, as the number of new devices and music stores launched in just the last 12 months shows, and nor is any company excluded from entering the market by Apple's success.

But Anthony Woolich, a partner at law firm Lawrence Graham who specialises in EU competition regulation, says that the commission has a track record of investigating consumer electronics industries at a relatively early stages of a new product or digital service. In the past 20 years, he notes, it has tackled the video game industry, Windows Media Player and the music industry on CD pricing.

'A key point to establish is Apple's dominance,' he said. Is it a dominant player in the market? The next point would be: are they carrying out a practice that has an exclusionary effect? If the answer to both these questions is yes, then Apple could be in trouble.'

Author: Simon Aughton