Experts cast doubt over merits of anti-trust inquiry against Apple

Experts cast doubt over merits of anti-trust inquiry against Apple

New Delhi: India’s antitrust regulator is examining Apple Inc’s local unit for selling iPhones through exclusive partnerships with two mobile phone service providers, according to a senior official at the Competition Commission of India, or CCI, a move that experts say indicates that the body, which is still in its infancy, is still figuring out what constitutes a breach of competition law and what doesn’t.

“Based on prima facie evidence, all members of CCI felt that Apple’s operations in India is such, which may be a result of colluding with certain service providers, besides selling iPhones through its select stores, thereby restricting consumers’ choice of buying it from any mobile store or selecting any service provider," said the official.

Such arrangements are common in most markets including the US, where, unlike India, phone makers and telcos typically collaborate to bundle their offerings. Under these offers, customers get a top-end device, such as the iPhone, at a relatively low price in return for signing up for a multi-year subscription plan with the telco.

The director general at the competition regulator has been asked to examine whether Apple may be abusing its dominant position in the smartphones market by placing such restrictions, added the official. “While there is also a case of abuse of dominant position by selling iPads only through Apple’s select stores, CCI’s investigation will focus more on iPhone," the official said.

Several companies sell their offerings exclusively through their own retail outlets and the competition body’s position reflects a lack of understanding of the subject, said a lawyer close to the Apple case in CCI who did not want to be identified.

Apple India’s spokesperson declined to comment on the development.

The commission studied the company, its way of functioning, the relevant market it’s operating in and other issues before asking the director general to investigate Apple, the Competition Commision official said. The study followed a complaint lodged with CCI two months ago. The director general has been given six months to file his observations. During this period, the official can seek information from the company.

The iPhone is available in India through exclusive offers from Bharti Airtel Ltd and Aircel Ltd and through Apple’s resellers. However, in what marks a change from how bundled offers work in the US, these telcos aren’t really offering the phone at a lower price. They are instead offering multi-year subscription plans to buyers who aren’t tied to them. Though the earlier versions of the iPhone were locked and could only be operated using the network of service providers selling them, the latest version of the iPhone—the iPhone 4—and the other model, iPhone 3Gs, are not locked and can be used on other networks too.

Apple doesn’t own any stores in India but has exclusive reselling arrangements with chains such as iStore and Imagine.

Apart from the merits of the case, considering the number of iPhones or iPads sold in the country, this is not such a big issue, said Naveen Mishra, lead telecom analyst with CyberMedia Research.

“The Competition Commission may have its own view on the subject, but these are expensive devices which only a select few can afford," Mishra said.

The offers by Airtel and Aircel may be disadvantageous to subscribers on a different network, “but customers will have to decide according to the options available or port their network through mobile number portability", he added.

When Blackberry entered India, it had an exclusive partnership with Airtel, which it extended to other providers and telecom distributors after gaining traction, Mishra said.

The former temporary chairman of the competition body too is of the opinion that the Competition Commission should tread carefully when it comes to such cases.

“These kind of cases should be taken with extreme caution," said Vinod Dhall, now the founder of Dhall Law Chambers. “Exclusivity in distribution, especially in high-tech products, is something which a company can adhere to for better brand image and sales."