John Paczkowski

Recent Posts by John Paczkowski

EU Probing Apple’s iPhone Carrier Deals

clouseau_380x285Apple’s iPhone contracts with European wireless carriers are drawing some unwelcome scrutiny abroad.

The European Commission has sent a questionnaire to a number of European Union wireless operators seeking details of Apple’s iPhone distribution deals — specifically, whether the company’s terms hamper competition in the smartphone market.

“The Commission has information indicating that Apple and Mobile Network Operators have concluded distribution agreements which may potentially lead to the foreclosure of other smartphone manufacturers from the markets,” reads the questionnaire, which was first obtained by the Financial Times. “If the existence of such behavior were to be confirmed, it might constitute an infringement of [antitrust law].”

Evidently, some carriers have complained privately that the unusually strict terms of Apple’s iPhone contracts and the sales quotas the company demands essentially require them to devote an overlarge portion of their marketing budgets to the device to ensure they aren’t left with any unsold inventory, which they are obligated to pay for. And because of that, these carriers may not be able to promote competing devices in a similar fashion.

That’s the argument, anyway. Of course, the iPhone is among the best-selling smartphones in the world, and carriers peddling it don’t often find themselves sitting on unsold inventory. Still, it’s a concern.

Add to that rumors of contractual language that might ensure that Apple receives the same or better terms and subsidies given to rivals, and the rationale for the EC’s interest becomes a bit more clear. And interest is all it is at this point. The EC has not yet opened a formal antitrust investigation, and it may not ever. Before it can do so, the agency must determine that Apple is the dominant smartphone vendor in the European market, and right now that title belongs to Samsung.

Apple did not respond to a request for comment.

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