Apple loses Taiwan anti-competitive practices court case

[June 17, 2015]  By Michael Gold

TAIPEI (Reuters) - Apple Inc <AAPL.O> has lost a lawsuit in which it was accused of engaging in anti-competitive practices and will be fined T$20 million ($647,124), a Taiwan court said on Wednesday.

The island's Fair Trade Commission had previously levied the fine against the Silicon Valley firm for requiring its major Taiwan telecom partners to receive approval for pricing plans for its wildly popular iPhone series in advance of public release, in violation of Taiwanese law.

Apple subsequently countersued and lost the suit.

"Apple limited telecoms from setting contract price for its 4, 4S, 5 and 5S models, which is against the law," commission spokesman Chiu Yung-ho told Reuters. The court noted that Apple can still appeal.

When contacted by Reuters, Apple declined to comment on the matter.

Its iPhones are usually bundled with contracts via one of Taiwan's three major telecom companies, Chunghwa Telecom Co Ltd, Taiwan Mobile Co Ltd <3045.TW> and Far EasTone Telecommunications Co Ltd.

Taiwan Mobile and Far EasTone also declined comment. Chunghwa only said it respects the actions of the Fair Trade Commission, without elaborating.

The case was the first example of a jurisdiction fining the tech powerhouse for limiting the ability of its telecom partners to set its own prices, according to the commission.

Telecom companies in Taiwan own the rights to the phones they sell and can set prices however they see fit, the commission said.

"When the phone is transferred to a third party telecom, the vendor loses its right to set prices," said Chiu of the commission.

In addition to contract prices, Apple also insisted upon approving the telecoms' iPhone subsidies, price differentials between old and new phone models and advertising content, the commission said.

Apple was Taiwan's most popular smartphone vendor as of the fourth quarter last year, with a 32 percent market share, according to analysts International Data Corp.

Many Taiwan companies, including Hon Hai Precision Industry Co Ltd, Pegatron Corp <4938.TW> and Taiwan Semiconductor Manufacturing Co Ltd,  make components or provide assembly services for Apple gadgets, and Apple-related exports are a major driver of Taiwan's economy.

($1 = 30.9060 Taiwan dollars)

(Editing by Jacqueline Wong)

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