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Apple’s iPhone under the spotlight after EU considers antitrust case

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Apple in EU trouble

The European Union has officially confirmed that they will investigate complaints made against Apple regarding the uncompetitive nature of its iPhone deals with network providers.

The New York Times claims several individuals from a group of European network operators have come forward to unofficially complain about iPhone contracts citing the difficulty of some operators to compete with others who have been given more favourable contracts by Apple. Both the individuals and the networks they represent have requested to remain anonymous.

While the matter is serious a spokesman for the European Commission, Antoine Colombani, said that “There have been no formal complaints” but that “the commission is looking at the information submitted by these industry players. We will of course intervene if there are indications of anticompetitive behaviour.”

Apple’s response came from spokesperson Natalie Kerris who said, “Our contracts fully comply with local laws wherever we do business, including the E.U.”

Apple has huge clout in the smartphone market. Its most recent phone, the iPhone 5, chalking up more than 50 million sales since it launched in Q4 last year. Unlike other manufacturers Apple set iPhone sales quotas which operators have to adhere to or lose the opportunity to offer the phone to its customers.

The increasing power of manufacturers such as Apple and Samsung and huge consumer desirability of products such as the iPhone 5 and Galaxy S4 has led to operators providing larger subsidies for these high-end phones and therefore making smaller profit margins. However, Apple’s market share has been dropping in Europe in recent years with more competition from Android smartphones, as well as from Windows and BlackBerry phones.

The EU has not been afraid to impose significant fines on major companies in the past following antitrust complaints. Earlier this month Microsoft was fined $732M for failing to act on a settlement to provide users with the ability to select a wider choice of internet browsers.

While a formal case has not been opened it is likely EU commissioners will be keeping a close eye on iPhone sales and network contract negotiations. The threat of action alone may cause Apple to rethink their stance and quota based contracts.

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