France Telecom and its subsidiary Orange are denied the fruits of their exclusive agreement for the iPhone in France as the French courts declare the agreement anticompetitive. But is Apple feeling equally drained?
At the beginning of this month, a French court confirmed an earlier decision by the French Competition Council against the exclusive agreement between Apple and France Telecom for the supply of iPhones to the French market.
The French regulator opened its probe after Bouyges, France’s third-biggest mobile-phone company, complained about the 5-year exclusive deal in September 2008. The Competition Council found that the exclusivity given to Orange was anticompetitive, focussing on the negative impact on the price of the iPhone. France Telecom, Orange's parent company, appealed the decision to the French courts, where the appeal was opposed by Bouygues and SFR, the number two mobile provider, together with the Council.
The key concerns revolved around the impact on the pricing of the iPhones, and the requirement for subscribers to be locked into a 12-24 month contract with Orange. The Competition Council stated that this added another obstacle for consumers in a market already suffering from a lack of competition. Although this position appears to be a strange one in light of the hefty competition in the mobile market generally, the French regulator may have been doing Apple a favour as the company appears to be retreating from the exclusive model (take the current rumours of a link up with Verizon in the US for example).
The case contrasts sharply with the decision in Germany in 2007 which allowed Deutsche Telekom AG to have the exclusive right to distribute the iPhone in Germany, and leaves the exclusive agreement covering the UK (with mobile company O2) potentially exposed to challenge in a similar way.
Such rigorous application of the antitrust rules to new technologies and developing markets in certain jurisdictions highlights the need for careful consideration of the structure of companies' European distribution models, which can need to be set up differently as compared to in the US and its antitrust rules.
For further information please contact Andy James or Steve Wilson.
These materials are provided for general purposes only. Osborne Clarke does not accept liability for the contents of these materials and legal advice should be taken in respect of a particular matter.
These materials are provided for general purposes only. Osborne Clarke does not accept liability for the contents of these materials and legal advice should be taken in respect of a particular matter.
back to Upstream USA - European business issues - March 2009previous article next article