Linked by Thom Holwerda on Fri 22nd Mar 2013 11:08 UTC
Apple "European Union regulators are examining the contracts Apple strikes with cellphone carriers that sell its iPhone for possible antitrust violations after several carriers complained that the deals throttled competition." Well paint me red and call me a girl scout.
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RE[5]: big sigh
by oskeladden on Sat 23rd Mar 2013 00:11 UTC in reply to "RE[4]: big sigh"
oskeladden
Member since:
2009-08-05

The article reads as if the source(s) are the complainant(s) so I find no reason to find their opinions highly credible. The NYT article shows the greatest amount of objectivity in pointing out that small carriers in the US are in the same situation and yet seem to be satisfied... so it was my point that you are making up details about contracts you are not a party to and which you have never seen.


Here's the exact quote from the article:

"The issues do not appear to apply to carriers in the United States; an executive at an American carrier said the terms of its contract with Apple were aggressive but not unreasonable."

Given that quote, I'll leave it to others to judge whether I was "making up" the detail that these terms do not apply to the US.

And, just to be clear, the NYT states that the source is "a person briefed on the communications with the carriers". That is obviously a reference to a person in the Commission - an employee of one of the carriers is hardly likely to be described as "a person briefed on the communications with the carriers".

I'm not suggesting that Apple needs to have dominant market share. I am stating as a fact that a company with less than 30% market share is clearly not a "necessary" business partner that can exert undue force. I am stating that in a market where "others" represent 70% or greater market share, it should be impossible for anyone to argue that Apple is preventing them from doing business with others.


As a matter of law, that isn't correct. European competition law distinguishes between differentiated and homogenous product markets. The point is that differentiated markets are characterised by subjective prefences between products which cannot be reduced to matters of price and quality. If you read the article, you'll see that this precisely what the carriers are contending in relation to the iPhone.

This matters quite a bit in legal terms. For one, in differentiated markets market share is assessed with reference to value, not volume. I don't have the exact figures to hand - I can't access the reports from home - but my recollection is that Apple's market share by value for smartphones is around 40%. That is significant. More fundamentally, in a differentiated product market, the ordinary rules in relation to market share can be waived. The Commission has always stressed that it is possible for a company with a small market share to have market power in a differentiated product market. The usual 25% de minimis threshold won't apply and, as happened in the United Brands case, the strength of the company's brand is often treated as a more relevant factor in assessing whether it had market power than the quantitative tests such as cross-elasticity of demand which you seem to have in mind.

That's the law, not my personal opinion.

Reply Parent Score: 3

RE[6]: big sigh
by jared_wilkes on Sat 23rd Mar 2013 00:20 in reply to "RE[5]: big sigh"
jared_wilkes Member since:
2011-04-25

Yes, that is the quote, and I think you are projecting your own meaning on it. When the carrier rep says "that is not the case" I do not presume that he's referring to differences in contracts when he clearly hasn't seen the other contracts to speak of. I think it means: we are not dissatisfied and feel that Apple is acting in a monopolistic fashion.

Reply Parent Score: 1

RE[7]: big sigh
by oskeladden on Sat 23rd Mar 2013 00:29 in reply to "RE[6]: big sigh"
oskeladden Member since:
2009-08-05

I'm baffled. The article says:

"The issues do not appear to apply to carriers in the United States"

I genuinely do not understand how you can read that to mean:

"small carriers in the US are in the same situation"

Anyway, you can have the last word.

Reply Parent Score: 3

RE[6]: big sigh
by jared_wilkes on Sat 23rd Mar 2013 00:27 in reply to "RE[5]: big sigh"
jared_wilkes Member since:
2011-04-25

I'm also unclear as to what parallel you see with Chiquita where they clearly did have a massive monopoly and the EU needed to create new trade restrictions to control their business by artificially limiting imports based on region to prevent too many bananas from coming in from South America where the majority of Chiquita's production lies.

Reply Parent Score: 2

RE[7]: big sigh
by oskeladden on Sat 23rd Mar 2013 00:43 in reply to "RE[6]: big sigh"
oskeladden Member since:
2009-08-05

I'm also unclear as to what parallel you see with Chiquita where they clearly did have a massive monopoly and the EU needed to create new trade restrictions to control their business by artificially limiting imports based on region to prevent too many bananas from coming in from South America where the majority of Chiquita's production lies.


The argument in that case was that bananas (where Chiquita was dominant) should be seen as part of an overall market for fresh fruits (where they were not, and where they did not have market power). What was important about the case at the time was that it recognised a principle that consumer preferences for one product (bananas) above others (oranges) would be taken into account in determining whether a person had market power.

This principle has since been extended to preferences for individual brands in cases involving cosmetics and pharmaceuticals, amongst other things, to the extent that commentators on the topic now tend to the view that the traditional market definition is pretty much irrelevant in these cases.

Again, I don't think there's very much more I can say on this point - the law is what it is, regardless of whether or not you accept it. I don't particularly care whether Apple win or lose, but a decision from the Commission either way would be welcome (even if it's only a decision not to investigate), as it'll provide much needed clarity on how the 'differentiated product' jurisprudence applies to electronics.

I'll let you have the last word on this too.

Edited 2013-03-23 00:45 UTC

Reply Parent Score: 3

RE[6]: big sigh
by jared_wilkes on Sat 23rd Mar 2013 00:39 in reply to "RE[5]: big sigh"
jared_wilkes Member since:
2011-04-25

"a person briefed on the communications with the carriers" is exactly how I would expect an agent from a PR firm representing the carriers to be described. In fact, I can't think of a better "journalistic" way to describe such a scenario.

Reply Parent Score: 2