Apple's Contracts With European iPhone Carriers Examined for Potential Antitrust Issues

[MacRumors]

The New York Times reports that regulators with the European Union are taking a close look at contracts between Apple and its iPhone carrier partners, seeking to determine whether Apple's strict terms amount to anti-competitive behavior. In particular, Apple's practice of requiring carriers to commit to selling a certain number of iPhones has placed pressure on the carriers to promote the iPhone above other alternatives.

ome of Apple's competitors complain that the big purchases Apple requires from carriers strongly pressure them to devote most of their marketing budgets to the iPhone, leaving little money to promote competing devices, said an executive at one of Apple's rivals, who declined to be named to avoid jeopardizing carrier relationships.

Apple's practice of telling carriers how many phones they must sell and threatening to penalize them shows just how powerful the iPhone has become as a bargaining chip. Other manufacturers typically allocate fewer handsets to each carrier than they estimate it can sell to ensure that there is little, if any, leftover inventory, an executive at one rival handset maker said.

Carriers are of course not required to carry the iPhone, but customer demand for the device means that most carriers believe they have little choice and must agree to Apple's terms in order to remain competitive in the marketplace.

The European Commission has not yet launched a formal investigation of Apple over its contract terms, and it is unclear what its next steps will be, with spokesman Antoine Colombani simply noting that the competition regulators are "monitoring the situation". For its part, Apple says only that its contracts are compliant with all local laws.

Article Link: Apple's Contracts With European iPhone Carriers Examined for Potential Antitrust Issues

 

[peteullo]

Seems unnecessary to me. But then again I'm not a lawyer, nor do I want to be.

 

[UnfetteredMind]

Noooooooo one expects the Spanish Inquisition!

Bring me ... the comfy chair!

 

[irmongoose]

The only monopoly Apple has is a monopoly on iPhones.



irmongoose

 

[lolkthxbai]

The European Union has been at it with Apple a lot lately...

 

[nepalisherpa]

If Apple is confident about iPhones then why is it threatening to penalize carriers if they don't meet the sales quota? Rather than threatening them, make your OS and devices even better. Sales will happen automatically. I guess all those higher sales number of iPhones is partly explained by this.

Honestly, I want Apple to be hit hard so that they learn their lesson and start working on making their OS/products even better rather than spending time on all these nonsense stuffs like monopolizing or suing or stupid ads.

 

[Squilly]

Messed up. Creating a monopoly within carriers.

 

[vmistery]

I am more surprised they haven't looked at the default browser options on ios or how closed the eco system is considering how they treat Microsoft.

Does it actually hurt the Consumer setting sales targets? Doesn't sound like it to me.

 

[Born Again]

Apple has been a bully long enough.

Now that the fever over an iphone has subsided carriers can now push back.

No doubt they leaked the information out against apple.

 

[Sayer]

Because otherwise no one would want an iPhone.

 

[ArtOfWarfare]

Who is it that's complaining?

If it's other handset manufacturers, why don't they just go the Apple route and set up their own stores? There's no better place to sell your products than in your own stores (assuming you don't suck at designing stores. Which I guess you probably do. It's interesting how much most people suck at most things.)

 

[iGrip]

For its part, Apple says only that its contracts are compliant with all local laws.

Well, there we have it. Apple always tells us the truth, especially when it says it is compliant with law.



/s

 

[needfx]

Apple has become far worse than what the 1984 ad implied for IBM

 

[Mac21ND]

Walmart would never survive in Europe.

Edit: I stand corrected, I guess they're in the UK. I was thinking in regards to their overbearing demands placed on suppliers, etc;.

 

[samcraig]

What I find interesting is that Apple makes these contracts and there are "penalties" while other companies are ripped on for offering sales incentives.

Two sides of the same coin. Except one seems more "friendly" than the other.

 

[AZREOSpecialist]

European regulators want to know what's in your underpants. What is "anti-competitive" behavior? I thought, as a business, it is my right to do what I want with my products and to write whatever contracts I want - nobody is twisting the other guy's arm to sign my contracts. So how can a mutually agreed contract be "anti-competitive"? Did the carriers not have attorneys? Did the carriers not have an opportunity to propose revisions to their agreements? Ultimately, if the carriers agreed to the terms of those contracts willingly, then there's nothing to investigate.

This is the stupidest thing I've ever heard.

----------

Apple has become far worse than what the 1984 ad implied for IBM

How so?

 

[Oletros]

We will see how ends.

 

[nepalisherpa]

Walmart would never survive in Europe.

In UK, there are 565 retail units and 32 supercenters.

 

[Rogifan]

"The European Commission has not yet launched a formal investigation of Apple over its contract terms, and it is unclear what its next steps will be, with spokesman Antoine Colombani simply noting that the competition regulators are "monitoring the situation". For its part, Apple says only that its contracts are compliant with all local laws"

Can someone tell me why this is front page news (or news at all for that matter) other than anti-Apple stories are good for clicks these days?

 

[samcraig]

"The European Commission has not yet launched a formal investigation of Apple over its contract terms, and it is unclear what its next steps will be, with spokesman Antoine Colombani simply noting that the competition regulators are "monitoring the situation". For its part, Apple says only that its contracts are compliant with all local laws"

Can someone tell me why this is front page news (or news at all for that matter) other than anti-Apple stories are good for clicks these days?

OMG - what if MR is really a covert Google site looking to put down "the man" ?

 

[NutsNGum]

Walmart would never survive in Europe.

Despite the fact that is very much here in the UK already as the owner of ASDA.

 

[Stella]

I hope this comes to nothing for Apple's reputation.. you can be sure that if Apple are investigated and found guilty the media is going to be all over this.

Apple can't quite manage Consumer Law regarding Warranties on a per country basis though....

Walmart would never survive in Europe.

Walmart are in the UK at the moment - Asda.

Can someone tell me why this is front page news (or news at all for that matter) other than anti-Apple stories are good for clicks these days?

You've got to take the good stories with the bad.. isn't that how it works.

 

[bbeagle]

Can someone tell me why this is front page news (or news at all for that matter) other than anti-Apple stories are good for clicks these days?

Pro Apple stories are not part of this site any more.

Eric Schmidt lying should be a front page headline, but it's not. It's buried in an update to a front page headline that says Apple is lying.

 

[needfx]

[/COLOR]

How so?

This might help clarify

http://en.wikipedia.org/wiki/1984_(advertisement)

Intended message
Adelia Cellini states in a 2004 article for Macworld, "The Story Behind Apple's '1984' TV Commercial":
Let's see—an all-powerful entity blathering on about Unification of Thoughts to an army of soulless drones, only to be brought down by a plucky, Apple-esque underdog. So Big Brother, the villain from Apple's '1984' Mac ad, represented IBM, right? According to the ad's creators, that's not exactly the case. The original concept was to show the fight for the control of computer technology as a struggle of the few against the many, says TBWA/Chiat/Day's Lee Clow. Apple wanted the Mac to symbolize the idea of empowerment, with the ad showcasing the Mac as a tool for combating conformity and asserting originality. What better way to do that than have a striking blonde athlete take a sledghammer to the face of that ultimate symbol of conformity, Big Brother?[7]
However, in his 1983 Apple keynote address, Steve Jobs read the following story before showcasing a preview of the commercial to a select audience:
[...] It is now 1984. It appears IBM wants it all. Apple is perceived to be the only hope to offer IBM a run for its money. Dealers initially welcoming IBM with open arms now fear an IBM dominated and controlled future. They are increasingly turning back to Apple as the only force that can ensure their future freedom. IBM wants it all and is aiming its guns on its last obstacle to industry control: Apple. Will Big Blue dominate the entire computer industry? The entire information age? Was George Orwell right about 1984?[19]

 

[venusboy]

I thought, as a business, it is my right to do what I want with my products and to write whatever contracts I want - nobody is twisting the other guy's arm to sign my contracts. So how can a mutually agreed contract be "anti-competitive"?

The EU is not like the US. Anti-competitive behavior is not authorized and often penalized because monopolies impede innovation and create higher prices for consumers in the long run (e.g. Apple/Microsoft's enormous margins). In most EU countries it is illegal to sell at a loss (except during government defined "sales" periods).

In the EU a contract must be signed by consenting parties which are not under duress. They also have to be mutually beneficial. If you use the dominance of your product or market position to create a contract which advantages one party significantly more than the other, your contract can be considered null and void, or worse you can be forced to pay a penalty.

If you want to sell your product in the EU, you've got to play by their rules.