FTC chief goes after Apple’s alleged abuse of mobile carriers
New Fair Trade Commission (FTC) Chairwoman Cho Sungwook will hold her first commissioners’ meeting next week to decide whether the antitrust agency will accept Apple Korea’s pledge to fix its alleged ad cost dumping on mobile carriers here, according to officials, Tuesday.
The meeting has been drawing attention as it will decide whether the FTC will continue to investigate allegations that the U.S. tech giant has abused its market power over telecom providers, or close the case without questioning the illegality of such a practice. Cho has already hinted that she will take a closer look into the case. According to the FTC, Cho will convene the meeting Sept. 25 to decide whether to accept Apple Korea’s filing of a consent decree regarding the company allegedly abusing its market power in deals with the carriers.
“Apple Korea’s filing of a consent decree will be discussed at the meeting, but we cannot guarantee whether a decision will be made or if there will be additional meetings. There is no rule on how many meetings will take place,” an FTC official said. “If the consent decree request is accepted, however, the case will be closed without making a determination of whether the company’s practices are illegal. Otherwise, the case will be proceeded with as a standard one.”
FTC commissioners have held three meetings since December over allegations that Apple Korea unfairly collected advertising funds from domestic telecom firms, including SK Telecom and KT, but they failed to reach a conclusion at the last one held March 27.
The commissioners must decide whether to hand the case over to the prosecution or impose a fine on the company.
The case entered a new chapter in June, after the FTC announced that Apple Korea had filed the consent decree, a “partial surrender” that meant it would end some of the problematic practices. The FTC did not reveal the details of Apple Korea’s filing, but it was assumed to contain a plan to revise contracts with the local telecom firms over advertising costs. If the FTC accepts the filing and begins the consent decree process, Apple Korea will carry out the corrective measures and the commission will close the case.
If the FTC rejects the filing, however, its investigation will continue. “If the FTC rejects the filing, it can become another global precedent finding the U.S. tech giant’s business practice as unfair, since Apple uses similar policies of passing on iPhone marketing costs in other countries,” an official at a local telecom company said.
“If the FTC accepts Apple’s consent decree, on the other hand, it means the Korean competition authority will not question the practice, providing grounds for Apple to maintain the policy in other markets.”
But chances of the case being closed are not high, given that Cho has already stressed the importance of the case. In a press conference as a nominee last month, she mentioned the ongoing FTC cases of Apple, Google and Naver and pledged the agency would take a closer look into them.
The track record of the FTC’s acceptance of consent decrees is not on Apple’s side. Since December 2016, the agency has dismissed four filed by Qualcomm, Hyundai Mobis, LS Group and Golfzon. When the FTC dismissed Qualcomm’s request in December 2016, it said it would not accept critical and obvious illegalities in consent decrees. Other countries have already taken a hard stance on Apple. In April 2016, France fined the company 48.5 million euros (64 billion won) for having mobile carriers pay for ads. In 2013, Taiwan slapped a 700 million won fine on the company for controlling iPhone prices.
Apple Korea has been passing on TV commercial costs for its iPhones and iPads to SK Telecom, KT and LG Uplus. The carriers are also shouldering the costs of a “free” repair service. The wireless carriers are claiming Apple has abused its superior position to force them to do this. However, Apple Korea has refuted this, saying it has no power to “abuse” chaebol.
Fair Trade Commission Chairperson Cho Sungwook speaks during her inauguration ceremony at the commission in Sejong, Sept. 10.