Apple Fined in Taiwan for 'Interfering' with iPhone Pricing Policies

Apple runs afoul of commerce regulations in Taiwan for "interfering" with the iPhone prices and rates of local mobile service providers.

Taiwan's Fair Trade Commission has levied a $667,000 fine, which amounts to 20 million New Taiwan dollars, against Apple due to company's iPhone pricing policies in that country.

Apple is allowed to appeal the ruling but must "stop interfering with mobile service providers and handset distributors' pricing," Jenny W. Hsu of the Wall Street Journal wrote in her report. Failure to comply could result in a heftier fine of NT$50 million.

Either fine is unlikely to have much of an effect on Apple's bottom line. The iPhone and iPad maker reported revenues of $37.5 billion and net profit of $7.5 billion on Oct. 28 for its fiscal fourth quarter. Apple sold a record 33.8 million iPhones during the period.

Despite stiff competition from Samsung and other Android handset makers, Apple is poised to set more records. The company announced on Dec. 22 that its iPhone 5S and 5C handsets will finally go on sale through China Mobile, the world's largest cellular provider with 760 million subscribers, in Jan. 2014.

Taiwan's trade regulators accused Apple of setting how much three wireless operators, Chunghwa Telecom, Far Eastone Telecommunication and Taiwan Mobile, can charge for iPhones, in violation of the country's Fair Trade Act, Article 18. The Cupertino, Calif.-based company also sought to influence their rate structures.

Article 18 of the country's Fair Trade Act falls under Chapter 3, entitled Unfair Competition. It states:

"Where an enterprise supplies goods to its trading counterpart for resale to a third party or such third party makes further resale, the trading counterpart and the third party shall be allowed to decide their [resale] prices freely; any agreement contrary to this provision shall be void."

In a statement, the commission laid out its proof. "Through the email correspondence between Apple and these three telecom companies we discovered the companies submit their pricing plans to Apple to be approved or confirmed before the products hit the market."

The commission asserted that Apple "has no right to meddle in companies' iPhone pricing plans after selling them distribution rights," said the report. Further, the Taiwanese wireless service providers "can distribute or resell iPhones at their complete discretion after paying Apple for those rights."

Apple was found to have asserted more influence with resellers than is allowed by Taiwan's laws. Among the commission's findings, VentureBeat's Eric Blattberg noted that "Apple required the companies to adjust those plans, the subsidies they offered with iPhone contracts, and the price difference between the iPhone 4S and the iPhone 5."

The commission discovered no such interference on the Android front. Handset makers HTC, Samsung and Sony, although investigated, did not strike "similar agreements with Taiwan’s telecom companies," added Blattberg.

Pedro Hernandez

Pedro Hernandez

Pedro Hernandez is a contributor to eWEEK and the IT Business Edge Network, the network for technology professionals. Previously, he served as a managing editor for the network of...