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

AZREOSpecialist said:
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.

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How so?
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since when has Apple ever compromised or revised? they know they are popular enough to set whatever rules they want.
 
nepalisherpa said:
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 starting working on making their OS/products even better rather than spending time on all these nonsense stuffs like monopolizing or suing or stupid ads.
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Because the carriers want to have the iPhone. Apple wants to sell iPhones. When there are new models, Apple can't keep up with demand. If you have carriers sitting on their iPhone inventory in favor of another device, the customer loses.

All The contracts say is: you said you would sell this many, we're going to hold you to that.
 
venusboy said:
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.
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Apple has never had a dominant market position in Europe (or anywhere else really). How is requiring companies to meet their sales projections anti-competitive. How is it better for consumers to have iPhones sitting in a back room because the carrier got a good deal on the Android FOTM...
 
wovel said:
Because the carriers want to have the iPhone. Apple wants to sell iPhones. When there are new models, Apple can't keep up with demand. If you have carriers sitting on their iPhone inventory in favor of another device, the customer loses.

All The contracts say is: you said you would sell this many, we're going to hold you to that.
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If these EU carriers are being penalized (note I say IF) - then the problem with your statement is that Apple is keeping up with demand in that area. In fact, too much so.

But I defer to an earlier statement. I see this on par with other manufacturers offering incentives to sell Android/Windows/etc.

Either way - you're incentifying (either through more profit or punishing for failing to meet a quota) people to push a product. So both Apple and Android makers are pretty much on par with each other there.
 
Taste of their own medicine, in a way....

I mean, Apple has always positioned itself as a very liberal company, but now they're on the wrong side of a socialist agenda with the EU. :)

As far as I understand it though, these contracts demanding a carrier sell a certain number of devices is REALLY more of a demand they BUY a certain minimum number of them?

So if, for example, U.S. Cellular works a deal with Apple to carry the iPhone and then they fall short of the number of iPhones they were confident they could sell to their customers? That's just a loss for U.S. Cellular on the extra phones they're stuck keeping in inventory.

I don't really see how this could be considered "illegal" or an anti-trust issue? It might be Apple driving a hard bargain that smaller carriers don't want to accept -- but that's fine! There are plenty of other cellphones they can offer. They have to make that VOLUNTARY decision whether they think the iPhone is a product they can sell enough of to be worth Apple's terms.


bjsterilite said:
The European Union has been at it with Apple a lot lately...
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Oletros said:
You don't have read the report, what carrier say is that all the contract say is: you MUST sell this many, we're going to hold you to that.
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Absolutely I read it. That is why you said the same thing I said (with one capitalized synonym).. Whatever that number is , it is based on a projection from the carrier. Contracts generally define what parties MUST do.
 
venusboy said:
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.
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I am glad I don't live there.

If other phone manufacturers made something as good as the iPhone (for instance the gs4 or Htc one) they can do the same thing, thus everyone would be on equal ground. Now if the phone manufacturers actually had a trust going on, that would be wrong, but with the hate I see between them, I highly doubt that. Everyone needs to step up their game
 
wovel said:
Absolutely I read it. That is why you said the same thing I said (with one capitalized synonym).. Whatever that number is , it is based on a projection from the carrier.
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No, it is not, please, feel free to point where it is said that those numbers are the carrier ones and not Apple ones
 
Minimum purchase orders are fairly normal in the business world. Even carriers do this with consumers, only they call it "contracts."
 
irmongoose said:
The only monopoly Apple has is a monopoly on iPhones.
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True, but only as far as it goes. Antitrust laws are only partially concerned with monopolies, if only because true monopolies rarely exist. The law's principle concerns are with the formation of trusts (cartels), and with anticompetitive exercises of market power. This preliminary investigation seems to be about the latter. If the description of Apple's wholesale policy is accurate, they could very well be required to change it.
 
samcraig said:
If these EU carriers are being penalized (note I say IF) - then the problem with your statement is that Apple is keeping up with demand in that area. In fact, too much so.

But I defer to an earlier statement. I see this on par with other manufacturers offering incentives to sell Android/Windows/etc.

Either way - you're incentifying (either through more profit or punishing for failing to meet a quota) people to push a product. So both Apple and Android makers are pretty much on par with each other there.
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I agree. This is Apple's version of paying sales incentives. They should move it up to senior management where it belongs.

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Oletros said:
No, it is not, please, feel free to point where it is said that those numbers are the carrier ones and not Apple ones
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I will point you to where the carrier signed the contract. Did Apple kidnap the chairman's baby and say they would kill it if they did not sell 1 million phones?
 
wovel said:
I agree. This is Apple's version of paying sales incentives. They should move it up to senior management where it belongs.
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Yes and no. I don't think you can call this paying a sales incentive. This is punishing for NOT meeting sales. A little different.

The reason I said it was on par is because as a sales manager - if I can get more money from an Android sale - it makes sense for me to push harder to sell one to keep profits up. However with Apple - my incentive is to avoid losing money or an iPhone contract with Apple.

To the consumer - very little difference - they will be pushed by some reps to buy whatever helps the carrier the most. If they know they can offset Apple's requirements by selling X amount of Android at X profit - then they will push Android anyway. But if they couldn't make up the difference - they're going to push the iPhone. Simple business math.

But calling what Apple may be doing as per this story isn't a positive sales incentive. It's a punishment.
 
venusboy said:
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.
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True, and the moment one company can penalize another for not playing by their rules, then an abuse of market power is rightfully suspected. Not that we know what is going on here. The EU doesn't even seem to know for sure, which is why the investigation is preliminary.
 
wovel said:
Excuse me? I did not backpedal even a little. Where do you think the numbers came from? It is obvious you find this whole issue confusing. Let it go.
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Yes, you're backpedaling because the text contradicts your claims.

Still waiting where it is said that are the carriers the one saying how many iPhones can sell.
 
eh?

Many sales driven contracts I have are based on minimum order or required targets especially if some form of exclusive contract is being agreed.
This reads as pretty much BS to me.

The carriers didn't have to agree to the deal and if they didn't then I am sure their competitors would be delighted... that's just how I imagine it would be. Competitive capitalist open market 101.

The deal - you can sell our product (for there is only one iphone (model differential irrelevant) and here are the targets for the contract, sell X agreement, sell -X you still pay the deal, sell X+ we give you an extra % deal, seems ... or any variation of this, with ipods, ipads etc thrown in. Just sounds like an incentive sales contract to me...

feckin EU nonsense, maybe they are looking for Apple to bail out Greece...
 
what a load of old tosh! EU networks can not complain about anything considering their cross network charges and european data roaming charges almost required you to sell your home at one point.

Is it not the case that Apple are just being commercial and not fixing anything? Did they force o2 to stock and sell the iPhone?
 
why do posts like this always bring out pro capitalism and Pro American comments. your economy is garbage and it will remain that way because of this. capitalism encourages garbage products with short life cycles and minimum warranty and an uneven distribution of wealth. in my opinion anyone who defends a large corporation is furthering your economic downfall
 
Requiring minimum quantity of units sold is not unique to Apple or smartphones. It's a common practice in B2B sales.
 
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