For all of the good news Apple Inc has received lately, it was time working against them. In a flurry of China approved deals, purchasing companies and selling the Mac Pro stateside, Apple has been coming up smelling like roses. Until today. News has surfaced the Taiwan Fair Trade Commission has slammed Apple Inc with a $670,000 fine for forcing carriers to set their prices. The Taiwan FTC governing agency has further warned Apple, if they continue their practices, further charges and fines will be forthcoming. Add in some really bad press.
What is going on? After all, it is common practice for manufacturers, especially Apple Inc to set pricing. They do not want to have their products sold for less and lose money, right? Sure – that practice works when a carrier is hired by Apple to sell the iPhones and simply provide the service for use. In the specific case reviewed by the Taiwan FTC, carriers are outright purchasing the iPhones from Apple Inc, so technically, Apple has received their profit. This should free the company to sell the phone as high or as low as they please. Yet, per the Taiwan FTC, Apple Inc is forcing carriers hands on price control. This is a direct violation of Taiwan’s free-trade policy.
Apple Inc’s subsidiary, Apple Asia is in the center of this storm. Jenny W. Hsu of the Wall Street Journal, further exposed the mar against Apple Inc. Not only was the company pushing carriers to fix the pricing on iPhone, but they were using strong-arm tactics to force service contract pricing. The companies paid for the distribution rights of the phones and under all rights of the law, the purchasing carriers can determine their own costs and levels of competition. Once Apple Inc shakes hands to sell those distribution rights, they are to step away and walk away. Right now the focus is on the iPhone product, no word has surfaced regarding if this will encompass the iPad.
Taiwan’s governing agency states it was through “email correspondence between Apple and these three telecom companies,” they discovered Apple Inc’s tactics to their buyers. That directly violates Article 18 of the Fair Trade Act in Taiwan. Forcing carriers to set pricing once they buy distribution rights just is not permitted. The three affected carriers are: Chunghwa Telecom Company, Far Eastone Telecommunication Company and Taiwan Mobile Company.
Apple Asia, an Apple Inc subsidiary pushed the limits further when they demanded all three companies are to turn over their promotion plans for the iPhone. This, stated Apple, would then be approved or declined, depending on their discretion. Legislators started pushing the case earlier this year when it was discovered all of the carriers had the same set price of the iPhone, demoting the level of competition Taiwan thrives upon. To add further to the investigatory burden, it is rumored officials in Europe may be launching a similar review against Apple Inc.
With exciting news like the iPhone 6 rumored for an earlier launch, pre-orders beginning with China Mobile and Apple Inc purchasing BroadMap and Catch – this is the last bit of bad press they need. The Taiwan FTC agency has warned Apple to draw back the iPhone price fixing to prevent future fines, which could rise above the $1 million mark, for each instance. Apple Inc shares remained steady this morning in pre-market trading and seemingly appears unaffected by the news, at this time. Apple could not be reached for a comment.