Apple Investigated by European Commission Following Complaints

 
 
By Michelle Maisto  |  Posted 2013-03-22
 
 
 

The subsidies that wireless carriers pay to offer the Apple iPhone are a well-known cross they bear. Certain telecoms, however, have apparently gone from shrugging their shoulders in resignation to grumbling in the ear of the European Commission.

While no carrier has filed a formal complaint against Apple, EC antitrust regulators are now investigating possible anti-competitive issues involving the distribution of the iPhone and iPad, due to "informal complaints from several telecoms operators," Reuters reported March 22.

"Generally, we are actively monitoring developments in this market," EC spokesperson Antoine Colombani said at a commission briefing, according to the report. "We will, of course, intervene if there are indications of anti-competitive behavior to the detriment of consumers."

A source, who declined to say which telecoms had complained, told Reuters, "Apple insists on a certain level of subsidies and marketing for the iPhone."

T-Mobile has raised eyebrows for its stated plan to offer the iPhone to consumers with an inexpensive monthly financing plan and no contract, instead of subsidizing the device to reduce its price to $199 but making sure subscribers stick with them for a minimum of two years.

T-Mobile CEO John Legere has repeatedly said that the current way carriers do business makes no sense.

"If you landed from Mars on this planet and you looked at the way people sell to customers in this industry, you would get back in your spaceship and go where you came from. It makes no sense," Legere told an audience at the Consumer Electronics Show in January. "We sell cheap devices and lock people in as prisoners for multiple years, clearly until we can recoup the value."

Sprint began selling the iPhone in 2011, years after rivals AT&T and Verizon. CEO Dan Hesse had described Sprint's lack of an iPhone as the No. 1 reason subscribers left the network, and so it entered into an agreement to buy 30.5 million iPhones for a reported $20 billion. The Wall Street Journal reported at the time that because of up-front costs associated with the iPhone, Sprint wouldn't make a dime off the iPhone until 2014.

On Feb. 7, Sprint announced the results of its 2012 fourth quarter, which included its best iPhone sales to date—with 38 percent of them going to new customers, a percentage far higher than AT&T or Verizon has managed—but it still posted a loss of $1.3 billion.  

Apple has been under the scrutiny of the EC before.

In 2012, the ebook terms that Apple struck with several major publishing houses—and then tried to use to force Amazon to keep its pricing in sync—aroused suspicion of being anti-competitive.

In the United States, the Department of Justice filed a suit against Apple in April 2012. In September, the EC also began looking into the matter, as it pertained to Apple, Simon & Schuster, HarperCollins, Hachette Livre and Verlagsgruppe Georg von Holtzbrinck. Quickly, the latter all offered to settle the case. They said they would terminate their "agency agreements" over the sale of ebooks, and would not "restrict, limit or impede ebook retailers' ability to set, alter or reduce retail prices for ebooks and/or to offer discounts or promotions."

An Apple spokesperson told Reuters, regarding Apple's subsidy and marketing policies, "Our contracts fully comply with local laws wherever we do business, including the EU."

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