Tech

iPhone and iPad Antitrust Troubles Resurface

By Dmitry Sheynin , Mar 23, 2013 08:37 AM EDT
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Apple's distribution practices for iPhone and iPad are under fire again in the European Union, as antitrust regulators probe whether the agreements Cupertino has with various telecoms are anticompetitive.

The latest investigation comes amid numerous informal complaints from cellphone carriers mostly based in France that Apple's contracts unfairly favor larger telecoms. The European Commission has signaled it is taking the complaints seriously, although no formal complaint has been filed. The EC has the authority to open a complaint itself.

"The markets for smartphones and tablets are very dynamic, innovative and fast-growing. Samsung's growing market position and the success of Google's Android platform are good reasons to believe that competition is strong in the markets for smartphones and tablets. However, the Commission has been made aware of Apple's distribution practices for iPhones and iPads. There have been no formal complaints, though. The Commission is currently looking at this situation and, more generally, is actively monitoring market developments. We will intervene if there are indications of anticompetitive behaviour to the detriment of consumers," a spokesman for the commissioner said.

The new EC actions mirror a similar legal kerfuffle Apple faced in 2012 when it basically attempted to force U.S. carrier Leap Wireless to sell more iPhones than its customers were willing to buy. In its agreement with Apple to carry the iPhone, Leap was forced to purchase $800 million worth of iPhones over the span of three years. By May of 2012, the company was already sitting on about 160,000 unsold iPhones.

So why are carriers entering into these agreements in the first place? The New York Times explains the predicament fairly well:

"While European carriers quietly grumble about Apple's muscle in the marketplace, Apple does not force any of them to sell the iPhone — it does not need to. Carriers are petrified at the thought of not having the smartphone because it remains a huge hit with the public, driving waves of customers to their stores, especially in the months after the latest models are introduced and heavily advertised."

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