Apple Asia – the local subsidiary of Apple Inc. based in the United States – was fined by ROC Fair Trade Commission on December 25, 2013 and was ordered to pay NT$20 million (which is US$665,624) due to its restrictive practices governing its cell phone distributor deals with the nation’s telecommunications companies.
In addition to that, Apple’s Asian subsidiary was ordered to halt such illegal actions immediately, as they block competition. The FTC stated that Apple Asia is in charge of selling iPhone handsets in Taiwan via three of the nation’s biggest telecoms operators: Far Eastone Telecommunications Co. Ltd, Taiwan Mobile Co. Ltd and Chunghwa Telecom Co. Ltd.
The FTC also revealed that the Asian subsidiary’s agreements with the three carriers focus on different aspects, including payments, invoicing and procurement, while the responsibility for all disagreements in these matters are left for the carrier to handle. Moreover, security, as well as inventory risk is also borne by the carriers, as they are dealing with a buyout distribution relationship with Apple Asia.
Apple Asia also asked the carriers to submit initial tariff schedules for iPhones they offer for approval. Emails exchanged between the three carriers and Apple Asia showed that the tech giant demanded from the carriers to adjust subscription pricing and sales subsidies. The FTC confirmed that the telecoms operators’ freedom to set their own pricing and cost structure according to market conditions was infringed and affected competition within and between brands.
Photo Credits: TheDrum