Korea likely to be third country to fine Apple for unfair contracts with carriers

An investigation by the South Korean Fair Trade Commission (FTC) into alleged unfair practices by Apple is expected to result in the iPhone maker being fined, says a local report. Apple is accused of ‘dumping’ both advertising and repair costs on carriers.

It follows earlier fines for unfair contracts in both Taiwan and France …

Korea’s FTC began its investigation almost two years ago. Apple is accused of imposing minimum purchase volumes on carriers regardless of sales levels, forcing carriers to meet part of the cost of warranty repairs and obliging carriers to run and pay for Apple-created iPhone ads.

The Korea Herald reports that the FTC has now concluded that Apple was guilty, and is likely to impose fines once the Cupertino company has been given the opportunity to respond.

The Fair Trade Commission’s secretariat recently agreed to impose penalties on Apple Korea over the unfair practice and sent an examination report to Apple Korea to seek an explanation, according to the sources.

The FTC will confirm whether to impose sanctions and the range within a few days after hearing from Apple Korea.

Carriers say that they have been forced to pay the entire costs of running Apple’s own iPhone ads.

In November, three telecom operators — SKT, KT and LG Uplus — aired TV commercials promoting the designs and functions of the iPhone 8 and iPhone X as Apple requested, but at their own expense.

“When you see iPhone’s TV commercials here, everything is the same except for a telecom operator’s logo at the end of the commercials. Still, telecom firms should bear all the costs standing at billions of won,” said an executive of one of the three firms on the condition of anonymity.

Back in 2013, Apple was fined $666k for fixing iPhone pricing in Taiwan. And in April, Apple was fined $60M for a range of unfair contract terms which included contributing to the cost of ad campaigns managed by the iPhone maker.

Apple opened its first retail store in South Korea earlier this year, contributing to the company achieving its highest ever market share in Samsung’s home market.

Photo: Apple Store, Seoul, by Hypebeast

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