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Apple Fined $670,000 In Taiwan For Price Fixing

Dec 25 2013, 6:51am CST | by , in News

 
 

Another one of these little stories that show the difficulty that multinationals have around te world. What might be considered entirely respectable behaviour in one market can end up being illegal in another. Here Apple's crime was to try and dictate what price iPhones would be sold at. Given that Apple has sold distribution rights to the local firms, Apple is therefore not allowed to pressure them on their pricing:

Apple Inc. has been fined 20 million New Taiwan dollars (US$670,000) and ordered to stop interfering with mobile service providers and handset distributors’ pricing, Taiwan’s Fair Trade Commission said on Wednesday.

Apple can appeal but may face a fine up to NT$50 million if it doesn’t comply, the commission said.

It found the Cupertino-based company violated article 18 of Taiwan’s Fair Trade Act by telling Taiwan’s three main service providers how much to sell iPhones for. Apple also asked Chunghwa Telecom Co. CHT +1.37% , Far Eastone Telecommunication Co. and Taiwan Mobile Co. 3045.TW +0.52% to adjust rates.

The U.S. computer company has no right to meddle in companies’ iPhone pricing plans after selling them distribution rights, the commission said.

The three carriers can distribute or resell iPhones at their complete discretion after paying Apple for those rights, the commission added.

We can all understand what Apple was trying to do: the iPhone is a premium product and the company obviously wants it to sell at a premium price. This is part of the way that the company protects its brand. So they don’t want the three distributors cutting prices in order to gain further market share: and thus the pressure on pricing.

It is indeed true that the distributors are going to pay Apple exactly the same price whatever they charge the consumer. So in the short term it’s no skin off Apple’s nose if they do get into a price war. But there’s that longer term thing of where the iPhone is positioned in the market. And as we know, Tim Cook has repeatedly said that Apple just isn’t interested in chasing market share. It’s perfectly happy being regarded as the aspirational must have at the top of the market spectrum.

However, as we can see, this tactic doesn’t go down very well with the market regulator. At least in Taiwan it doesn’t, it might be just fine elsewhere (here in Europe we’d probably call it retail price maintenance which is similarly illegal except in very special circumstances). We’ve a similar story with Apple and consumer warranties over here in the EU. AppleCare offers one set of rights but these are lower than the statutory rights that the law gives consumers. Or rather they were: Apple is changing the terms after fines from the Italian regulator. Just another reminder that we don’t really have a global market as yet: rather a series of different national ones and the rules and the laws can be different in each one.

Source: Forbes

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