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Apple Korea may face fines for shifting costs to local mobile carriers

2018.04.09 13:27:16 | 2018.04.09 15:51:59
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Apple could face fines of more than 100 billion won ($93.5 million) from South Korea’s antitrust watchdog for translating advertising and marketing costs of its latest iPhones onto Korean wireless carriers.

According to industry sources on Sunday, the Fair Trade Commission (FTC) secretariat recommended remedial and punitive action on unfair business practices of the iPhone maker.

Apple will be given an opportunity to appeal, and the decision will be finalized in the nine-member board or three-member executive meeting.

The U.S. smartphone maker has made it a practice to dump the marketing costs onto local carriers ever since it sold phones in Korea. The FTC embarked on a probe in 2016 and searched Apple Korea’s offices in Seoul in June that year and again in November 2017.

Three mobile service operators SKT, KT, and LG Uplus all carried the same TV ads for the latest iPhone 8 and X series released in November, with the only difference in the brief glimpse of the carrier’s logo at the end. The three all paid for the airing of the ads.

The local operators also fully paid for various promotions at retail outlets for the new launches. They had to take orders from Apple on the style of the ad banner as well as their display on retail shops, plus shouldering the cost for free after-sale repair service, stirring strong protests from the carriers and retailers.

Such abuse of power by a dominant market player infringes the local antitrust law.

Under the provision, Apple can be penalized with more than 100 billion won based on revenue from 2011.

By Lee Sun-hee and Kim Hyo-jin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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