An investigation is being conducted by the European Union regulators to find possible antitrust violations on contracts struck by Apple with cell phone carriers for its iPhone. This move was ordered after several carriers complained of such deals throttling competition. Although there were no formal complaints registered by the carriers, information pertaining to these contracts was submitted to the European Commission by the carriers. A statement issued by the administrative arm of the European Commission confirmed that a probe into the deals had begun; however, there has not been any initiation of a formal antitrust investigation. Furthermore, the commission is not obliged to act until a formal complaint is registered notifying the commission of the anticompetitive behaviour.
This statement was confirmed by Antoine Colombani, a spokesperson for the competition commissioner of the European Union, Joaquin Almunia. Addressing the press at Brussels on Friday, Mr. Colombani reiterated that there was no formal complaint lodged against Apple and regulators would need hard evidence before an antitrust case would be filed. Apple commented through a spokesperson stating that their contracts were in compliance with local business laws and the company would not violate the same.
The number of carriers in discussion with the European Union is still unclear. Interviews conducted with the companies revealed that Apple awarded stricter contracts to smaller companies in comparison with the larger ones. People with the knowledge of carriers’ relationships with Apple said that some European carriers must accept surprisingly strict norms when agreeing to sell iPhones, which makes it difficult for other handset makers to compete in the same market. These same issues don’t seem to apply to carriers in the United States. An executive at an American carrier asserted that the norms imposed by Apple were aggressive, but they weren’t unreasonable in anyway.
Apple is well known for tight control on design of products down to the smallest details and is also known to control the manufacturing process as well. It’s a well known fact that Apple’s relationship with carriers is masked by strict non-disclosure agreements and Apple’s exertion of controls to the extent being portrayed is not new. Although there are several carriers who are grumbling about the conditions imposed by Apple, it’s important to realize that carriers are not obliged to carry Apple’s products. In fact, carriers stand to make immense profit from the iPhone, and a few controls may be the price to be paid for such success.
