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British customers of iTunes will soon be charged up to 10 per cent less for their downloads, after pressure by the European Commission forced Apple into a change of policy.

In what represents a significant change to the downloading site's policies in the UK, Apple announced this morning it was lowering its British prices within six months to see songs and albums brought into line with what customers in the rest of the European Union pay.

This would see UK customers paying 74p instead of 79p per song, matching the EU's current price of 99 euro cents, and an average of £7.48 instead of £7.99 per album, equalling the EU's 9.99 Euros price.

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The company made its decision following pressure by the European Commission, which last April launched an investigation into Apple charging customers in Britain up to 10 per cent more to download tunes than the rest of the bloc.

The investigation specifically concerned deals signed by Apple with Vivendi’s Universal Music Group, Sony BMG Music Entertainment, EMI Group and Warner Music Group, and whether they stipulated varying prices within the EU. The case dates back to 2005, following an investigation by the British consumer association Which?

As a result of the price changes announced by Apple today, however, the company raised the possibility that it would "reconsider" its deals with the record companies concerned unless the labels renegotiated their agreements and dropped their prices for UK distribution in line with the price Apple pays for European sales.

If the record companies refuse to comply with the ultimatum, British music consumers may potentially find themselves unable to buy their songs on iTunes.

In a statement indicating its intention to make price changes - and making its demands of the record industry - Apple said: "Apple today announced that within six months it will lower the prices it charges for music on its UK iTunes store to match the already standardised pricing on iTunes across Europe in Austria, Belgium, Denmark, Germany, Finland, France, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland and Spain."

However, it added: "Apple currently must pay some record labels more to distribute their music in the UK than it pays them to distribute the same music elsewhere in Europe.

"Apple will reconsider its continuing relationship in the UK with any record label that does not lower its wholesale prices in the UK to the pan-European level within six months."

In a statement, Steve Jobs, Apple's CEO, said the moves were part of a bid to create a "pan-European marketplace" for music. "We hope every major record label will take a pan-European view of pricing," he said.

Asked whether the statement could mean fewer tunes available to iTunes customers if deals were renegotiated, an Apple source said negotiations with record companies were ongoing.

In a statement this morning, the European Commission welcomed Apple's decision to drop its prices, and announced that it was ending its action against the company as a result. If it had found Apple guilty of breaching EU rules, the Commission could have fined the company up to 10% of its annual worldwide turnover.

"The Commission is very much in favour of solutions which allow consumers to benefit from a truly single market for music downloads," Neelie Kroes, the EU Competition Commissioner, said.

"Prices for iTunes downloads in the UK are currently nearly 10 per cent more expensive than downloads in the euro zone. Following iTunes’ announcement, UK consumers will soon pay the same for music downloads from iTunes as customers from Euro-zone countries."

Today's announcement represents the latest battle being fought by Apple over its increasingly lucrative site, which has become a household name to millions of Brits downloading their tunes for iPods.

Last month, it was disclosed that Radiohead had ended a dispute with iTunes by agreeing to release their new material on the site. The deal came two months after they shocked the record industry by leaving EMI and asking their fans to pay whatever they wanted to download their long-awaited new record.

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