By Foo Yun Chee
BRUSSELS, March 22 The European Union is looking
into potential antitrust violations involving the distribution
of Apple Inc's iPhones and iPads, after receiving what
sources said were informal complaints from telecoms operators.
The complaints involve handset subsidies and marketing that
the world's most valuable technology corporation sign-off with
operators that carry its smartphones and tablets, and also
includes subsidies that carriers pay to Apple, one of the three
sources told Reuters on Friday.
The source insisted on anonymity because contracts with
carriers are business secrets.
"Apple insists on a certain level of subsidies and marketing
for the iPhone," said the source, who declined to identify the
companies that had approached the Commission.
U.S. and European operators pay hefty subsidies to
smartphone makers including Apple, offering customers an
attractive discount on devices in exchange for tying them into
lucrative two-year wireless contracts.
Historically, Apple has been able to command higher fees for
its devices because of its market dominance. It also tended to
tightly regulate launch prices for its devices, while rival
handset makers with less market share tended to defer to
operators on pricing announcements.
Since 2012, however, Samsung Electronics
unseated Apple as the world's most-used smartphone brand, which
industry experts say will erode the U.S. corporations' ability
to negotiate the best subsidies and marketing support.
U.S. regulators are unlikely to launch their own
investigation into Apple's industry practices because of a
different regulatory approach, and also recognition that the
company's own market clout is diminishing.
"They're one failure to innovate away, or one innovation by
somebody else away, from being in a very different spot," said a
U.S. telecom industry lobbyist close to both carriers and device
manufacturers, but who asked not to be named due to a lack
of authorization to speak to the media.
"Apple is an important, powerful and innovative company but
I don't think they've got the kind of market power that maybe
some in Europe are alleging where it would rise to the level of
running afoul of the antitrust laws," the person said.
A Commission spokesman on Friday said that EU competition
regulators had been informed about concerns over Apple and its
distribution practices. Three people familiar with the matter
said that several telecoms companies had aired their grievances
to the Commission.
Their concerns focused on the commercial terms in contracts
with Apple, said one of the sources, who declined to be
identified because of the sensitivity of the matter.
"There have been no formal complaints, though," Antoine
Colombani told a regular Commission briefing. "Generally, we are
actively monitoring developments in this market. We will, of
course, intervene if there are indications of anticompetitive
behaviour to the detriment of consumers."
Apple spokeswoman Natalie Kerris said: "Our contracts fully
comply with local laws wherever we do business, including the
A second source said that the companies expressed their
concerns to the Commission late last year.
It is not the first time Apple has come under the scrutiny
of the EU antitrust regulators. The company was the target of an
investigation nearly three years ago over its iPhone business
It subsequently allowed cross-border repair services and
eased restrictions on applications for the iPhone, which
resulted in the Commission dropping its investigation.
"Historically, carriers have looked at themselves as being
at the center of the ecosystem, and if there was a party in the
relationship ... that held the power, it was them," the industry
"The dynamic is a little different with respect to Apple,
but I don't think that's a problem because Apple has rivals."
The New York Times first reported that the EU was looking
into complaints about Apple.