Tech

EU to investigate how Apple sells its iPhones

By Michael Mayday , May 28, 2013 08:28 AM EDT
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The European Commission is allegedly in the preliminary stages of launching an investigation. An investigation which could nail Apple for implementing anticompetitive tactics to sell its iPhone handsets in Europe.

This, on the tail of a Congressional inquiry into Apple's tax practices, isn't good news for the handset manufacturer and technology company.

No formal investigation has been announced, but European regulators based in Brussels, Belgium, have sent out nine-page questionnaires to European phone carriers. Those questionnaires, according to The Financial Times, ask for the details of Apple's distribution terms.

"The Commission has information indicating that Apple and Mobile Network Operators ("MNOs") have concluded distribution agreements which may potentially lead to the foreclosure of other smartphone manufacturers from the markets," the questionnaire states. "There are also indications that certain technical functions are disabled on certain Apple products in certain countries in the EU/EEA. If the existence of such behaviour were to be confirmed, it might constitute an infringement of [antitrust law]."

Apple's terms have long been the point of contention for many retailers, who say the company's tight control over their products, and the high demand for them, has apparently forced a variety of companies to accept terms they wouldn't have otherwise.

Those terms apparently include the purchase of a minimum number of iPhones, and force carries to give Apple products subsidies to ensure its iPhone handset matches or beats deals offered by rival handset makers.

That potentially costs carriers a lot of money. The terms also help to muscle out a good deal of the competition from smaller handset manufacturers like Nokia.

Though the iPhone is a popular handset, making deals with Apple doesn't always work out for carriers - especially smaller ones.

For example, Leap Wireless, a mobile carrier which operates Cricket Wireless, revealed earlier this year that the small carrier will likely be on the hook for $100 million worth of unsold iPhones after its one-year contract with Apple ends in June, according to an article by The Wall Street Journal.

The preliminary investigation was apparently spurred by private complaints by European wireless carriers, who say Apple's terms are anticompetitive.

The nine mobile carriers have time until June 17 to respond to the questionnaire.

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