Apple facing potential EU iPhone anti-competition investigation

May 27, 2013
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Apple faces potential anti-competition investigation in Europe, with claims that the European Union is quizzing carriers on whether the iPhone maker strong-arms deals and limits some devices in ways that could eventually spawn antitrust sanctions. The EU has been sending out a nine-page questionnaire, according to the Financial Times, collecting Apple tactics information following a number of "private complaints" from operators. Among the greatest concerns is that Apple has insisted on "most favored supplier clauses" which forces carriers to give the Cupertino firm the best deal.

For instance, it's alleged that Apple demands "the same or better terms" for iPhone subsidies and sales incentives as any other smartphone carriers offer; part of the questionnaire reportedly concerns how those demands are communicated, for instance whether they are part of the written contract or instead expressed in other ways during negotiation. The EU also questions whether Apple insists on a minimum number of iPhone orders before it will finalize a deal.

Apple's approach to marketing budgets has also been highlighted in the fact-finding process, with questions around how much carriers are required to spend during the launch of new models and over the lifespan of devices.

However, a second aspect of the early inquiry concerns how Apple approaches 4G networks in Europe, and iPhone support for them. "There are also indications that certain technical functions are disabled on certain Apple products in certain countries in the EU/EEA" the questionnaire states. "If the existence of such behaviour were to be confirmed, it might constitute an infringement of [antitrust law]."

It's unclear exactly what sort of limitation the EU is referring to at this stage, though it supposedly could be either technical or contractual in nature. Currently, the iPhone 5 only supports certain LTE networks, though that's more down to the issues of supporting the multitude of bands carriers have used for their 4G deployment.

The EU has not commented publicly on the questionnaire, which is an early-stage investigation and may not reach official inquiry stage. Before that could happen, the Commission would need to be convinced that Apple holds a market-dominance position in Europe.

Apple has said that it complies fully with European law with its contracts.

It's not the first time Apple and its peers have made headlines in recent weeks over allegations of inappropriate business practices. Last week, a US Congressional committee claimed the firm was using incredibly convoluted financial systems - including setting up numerous offshore subsidiaries registered to "top officials" at Apple but with no employees - to shave an estimated $74bn from its tax bill over the course of four years.

Meanwhile, Google is under similar scrutiny in the UK and Europe, amid claims that its UK operation funnels money through a more tax-effective Irish division. The search giant has been accused of "immoral" handling of its tax obligation by UK government officials, something chairman Eric Schmidt has strongly denied.


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