EU weighs iPhone operator contracts amid antitrust complaints

European Union officials are looking into the handset contracts that Apple strikes with mobile operators for possible antitrust violations after several carriers complained that the deals are harmful to competition, according to a New York Times report.

EU officials are looking into Apple's deals with operators.

A group of unnamed European wireless carriers recently submitted information about their contracts with Apple to the European Commission, according to the report, which cited an unnamed source briefed on the communications.

The European Commission, the EU's administrative arm, confirmed to the NYT that it is examining Apple's deals with operators, but no formal antitrust investigation has begun. The commission is not obligated to act until it receives a formal complaint of anticompetitive behavior, and no antitrust case has yet been opened.

In a statement, Apple spokeswoman said its contracts "fully comply with local laws wherever we do business, including the EU."

Of course, carriers are not obligated to sell iPhones; however, given the popularity of the devices, they're hard-pressed not to do so. Part of the problem comes in Apple's policy of setting a quota for how many iPhones a carrier needs to sell. If quotas are not met, the carrier must pay Apple for unsold devices. There is also the issue of Apple setting consumer prices for its iPhones.

It remains to be seen how the European Commission will handle the informal complaints.

Stephen Kinsella, a partner with the Sidley Austin law firm that has been involved in some big antitrust cases in Europe, including the continuing investigation of Google by the EC, told the NYT that it was valuable for companies and regulators to meet before a formal complaint is filed. The commission can also open an investigation without a formal complaint, as was the recent case with Apple and four major book publishing groups.

In January Apple noted that that 36 operators would be gaining LTE support for the iPhone 5, including carriers in Italy, Denmark, Finland, Switzerland, the Philippines and several Middle Eastern countries. Apple allegedly insists mobile operators submit to its own independent testing of their LTE networks' performance before it will enable LTE functionality for iPhone 5 devices operating on their network.

Apple's iOS and Google's Android continue to take the lion's share of smartphone sales in Great Britain, accounting for 30.6 per cent and 56.2 percent of purchases, according to Kantar Worldpanel ComTech. Microsoft's Windows Phone's share is growing ever so slightly, to more than 6 per cent in Great Britain as of January, up from 2.4 per cent the previous year, and 14 per cent in Italy.

For more:
- see this New York Times article
- see this CIO article
- see this ZDNet article

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