French courts tighten iPod tax loophole

A French court has ruled that foreign retailers must warn consumers to pay the country's so-called "iPod tax" copyright levy on MP3 players ordered online.

The levy, designed to compensate rights holders for digital copying, means that an iPod bought from a French seller is about €40 more expensive than from an websites based in, say, Luxembourg.

By law, consumers are required to pay the levy when they import their MP3 player, USB storage or blank media. In reality many dodge the extra cost or are unaware of their obligation.

Now the court of cassation has ruled in favour of domestic retailer RueDuCommerce.com that a foreign competitor acted unfairly by not telling its customers about the rules.

French law professor Cédric Manara said: "If one follows the direction shown by the French Court of cassation, it can mean that if a foreign website wants to sell in France, it has to play by the local rules... which also means that we are far from an even playing field for e-commerce in Europe!"

The victory for RueDuCommerce.com is minor, however. Telling French consumers they ought to pay the levy once their order arrives is no guarantee they will.

The European Commission has repeatedly signalled in the last few years that it wants to see more online shopping across borders. Apple itself drew ire from Brussels over its higher UK iTunes prices, and was forced to bring them into line with elsewhere in Europe.

Earlier this year the UK record industry lobbied the government for a copyright levy on MP3 players here. The idea seems to have slipped down the agenda since. As French retailers have seen, in the absence of pan-EU rules, such a move would be likely to drive UK customers abroad in search of an unlevied iPod.

The court of cassation decision is here (PDF, in French). ®