Company could face $637 million fine

The European Union isn’t done with iTunes yet.

Though Apple’s deal with EMI on Monday to allow DRM-free downloads seemingly ends the complaints of some European governments and consumers groups that the company is unjustly tying iTunes songs to the iPod, the EU is still upset about region-specific iTunes stores.

The European Commission, the executive arm of the EU, said Tuesday it is deepening its antitrust investigation into the way Apple’s iTunes store restricts cross-border downloads within the European market.

According to the Times of London, Apple could face a fine as high as $637 million.

The U.K. iTunes store charges 79p ($1.56) to download a single track. The same song costs e0.99 ($1.30), on Apple’s other European sites. This compares with 99¢ per track in the U.S.

In a statement of objections sent to Apple and several record labels, the EC competition commission objected to territorial restrictions that prevent users from taking advantage of the variable pricing for the same content.

“Consumers can only buy music from the iTunes online store in their country of residence,” the commission said in a statement. “Consumers are thus restricted in their choice of where to buy music, and consequently what music is available and at what price.”

An Apple rep said the company would also like to end cross-border restrictions.

“Apple has always wanted to operate a single pan-European iTunes store accessible by anyone from any member state, but we were advised by the music labels and publishers that there were legal limits to the rights they could grant us,” spokesman Steve Dowling told Daily Variety.

An EC rep backed up that argument.

“Our current view is that this is an arrangement which is imposed on Apple by the major record companies and we do not see a justification for it,” said EC spokesman Jonathan Todd, according to the Associated Press.

The statement of objections is a formal step in an antitrust investigation first launched in 2005 after a complaint from the British Office of Fair Trading alleging download charges were higher in the U.K. than elsewhere in Europe.

Apple and the record companies have two months to defend themselves in writing or at a hearing. The commission will then issue a final decision, along with potential fines.

The commission noted that the probe did not allege Apple is in a dominant market position and was not about the DRM issue.

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