Fair Trade Commission approves Apple consent decree on third attempt... Telecom companies say "It's a free pass"

(Photo)

[Asia Economy Ju Sang-don (Sejong) · Han Jin-joo Reporter] The Korea Fair Trade Commission (KFTC) has decided to initiate the consent decree procedure for Apple Korea on the third attempt. As a result, Apple has avoided a fine amounting to at least several tens of billions of won. The affected parties, the mobile carriers, are protesting, saying that the government has given Apple a free pass despite its behavior not changing significantly.

On the 18th, the KFTC announced that it had decided to start the procedure for the consent decree requested by Apple on June 4 last year. Song Sang-min, Director of the Market Surveillance Bureau at the KFTC, explained, "The Apple case involves abuse of bargaining position in transactions, and we judged that the business operator’s voluntary correction could effectively improve the transactional relationship between both parties. Considering that the win-win support plan can provide substantial benefits to small and medium-sized businesses, program developers, and consumers, we decided to initiate the consent decree procedure."

The consent decree is a system where a business operator proposes a reasonable corrective plan such as restoring the original state or compensating consumers or transaction counterparts, and if the KFTC recognizes its validity after collecting opinions from stakeholders, the case is promptly closed without determining illegality. From the KFTC’s perspective, it allows for quick relief to victims, while the business operator benefits by avoiding sanctions.

According to the KFTC, Apple proposed to the commission ▲a plan to reduce the burden costs on mobile carriers and introduce a consultation procedure for cost-sharing ▲a plan to alleviate transaction conditions and management interference that are unilaterally disadvantageous to carriers ▲a plan to establish a certain amount of win-win support fund to be used for coexistence with small and medium-sized businesses, program developers, and consumers, which the KFTC accepted.

The KFTC began a full-scale investigation into Apple in June 2016. Based on two years of investigation, in April 2018, the KFTC sent Apple a review report (equivalent to a prosecutor’s indictment) stating that Apple abused its bargaining position against mobile carriers by coercing benefits. Specifically, the KFTC found that Apple’s requirement for carriers to bear advertising costs for devices and costs related to free repair services constituted 'coercion to provide benefits.' It also judged that Apple’s unilateral imposition of unfavorable patent rights and contract termination conditions on carriers was 'disadvantageous provision,' and its interference in carriers’ subsidy payments and advertising activities was 'management interference.'

Subsequently, the KFTC held three plenary meetings from December 2018 to March 2019 to deliberate on Apple’s alleged offenses. However, the plenary meetings were suspended when Apple applied for the consent decree in June last year. Industry insiders analyzed that Apple, which had denied the allegations, shifted its strategy to the consent decree as it found it difficult to avoid sanctions from the KFTC. There is also a view that the KFTC’s decision could be used as grounds for sanctions in other countries, and that submitting a voluntary corrective plan is ultimately more beneficial than years of legal battles.

The mobile carriers, who are the victims of Apple’s unfair practices, are criticizing the KFTC’s initiation of the consent decree procedure as giving Apple a 'free pass.' A representative from a carrier said, "Apple’s recent behavior has not changed much from before. Carriers, whose interests are intertwined with product supply, find it difficult to actively express their opinions to the KFTC," adding, "The corrective plan should specifically state how advertising costs will be shared and how free repairs will be handled."

Regarding the KFTC’s decision, Apple stated, "Apple believes it has not violated any laws, but now we want to move beyond this process and focus more on our customers and communities."

Apple’s final corrective plan will be tentatively prepared within 30 days, followed by a 30 to 60-day period for collecting opinions from stakeholders, and then finalized through the KFTC’s review and resolution.

This content was produced with the assistance of AI translation services.