BUSINESS

Apple to take voluntary action to correct unfair practices in Korea

By Shin Ji-hye

Apple disappointed with the way Korea’s antitrust watchdog handled the case

  • Published : Jul 4, 2019 - 14:24
  • Updated : Jul 4, 2019 - 19:53

Apple has offered to take voluntary action to correct its business practices in the local telecom market, South Korea’s top antitrust watchdog said Thursday, after having previously accused the tech company of abusing its superior position and harming local mobile carriers.

Apple applied for a consent order June 4, the Fair Trade Commission said, meaning the company has initiated a process to close a case early by voluntarily agreeing to take corrective action to restore order to the market and rectify the harm it has caused, if the FTC approves the application. 

(Yonhap)


Disputes between Apple and the FTC began in June 2016 when the watchdog raided the Apple Korea office. In April 2018, it sent an examination report to the firm, seeking an explanation of its alleged unfair business practices.

The series of actions stemmed from suspicion on the part of the antitrust watchdog that the tech company had unfairly passed on the costs of its iPhone sales to local mobile carriers. These included the costs of advertising, launch events and repairs.

An initial hearing was held within the FTC in December, and since then Apple has had a chance to defend itself during two additional sessions.

The latest consent order, however, halted all hearings. The next step is a deliberation process within the FTC.

“(Apple) appears to have chosen the more economical option between continuing legal battles to the end -- going to the Supreme Court -- and an early compromise with the FTC,” said Song Sang-min, chief of the FTC’s anti-monopoly bureau. 

Hours after the announcement, Apple released a rare statement criticizing the FTC. 

“We are deeply disappointed with the approach the KFTC has chosen to take in this matter and strongly disagree with their actions because Apple has done nothing wrong.”

An industry insider said Apple may have felt attacked as some local media outlets described Apple’s application for the consent order as if the company were admitting wrongdoing.

The FTC did not disclose any details about the consent order but said such a path normally involves the company agreeing to take two kinds of corrective action. First, it agrees to halt its unfair practices and restore order to the market. It also agrees to rectify the harm it has caused other companies and consumers.

The FTC’s anti-monopoly bureau will submit its examination report to the watchdog’s deliberation committee, which will hold a hearing within 14 days. The judgment will then be conveyed to the FTC chairman after written consultations with interested parties, related organizations and the prosecutor general. No date has been set.

If the antitrust authorities decide not to approve the consent order submitted by Apple, the company could face a fine of up to 2 percent of the concerned sales.

Apple has faced similar penalties in other nations -- 700 million won ($620,000) in Taiwan in 2013 for controlling iPhone costs, and 64 billion won in France last year over unfair practices against carriers.

Other companies in Korea have also submitted consent orders to the FTC. The nation’s search giant, Naver, became the first company to do so in 2014. Since then, 12 more companies have followed suit. They include SAP Korea, Microsoft, SK Telecom, LG Uplus, KT, CJ CJV, Qualcomm and Hyundai Mobis.

By Shin Ji-hye (shinjh@heraldcorp.com)


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