Apple faces near €50M charge in French challenge to mobile operator contracts

Apple faces a legal challenge to its mobile operator contracts in France that could cost the company nearly €50 million ($56.7 million) in repayments if the claims are accepted by a domestic court.

France's Directorate General for Competition, Consumer Affairs and Fraud Control (DGCCRF) this week filed a complaint against Apple at the Commercial Court in Paris, alleging that 10 clauses in the U.S. smartphone maker's contracts with French mobile operators are illegal, local news outlet BFMTV reported.

The competition authority called on the court to order Apple to repay a total of €48.5 million to French mobile operators -- comprising €14 million to SFR, €11.6 million to Orange, €8.2 million to Free, and €6.7 million to Bouygues Telecom -- and to cancel the contract clauses, which the DGCCRF argues are unfairly skewed in favour of Apple and therefore breach French commercial law.

Clauses the DGCCRF claims are illegal include minimum order requirements, lack of pricing flexibility, the need to pay into an Apple-controlled advertising fund, a requirement to give iPhones prominence in retail outlets, freedom for Apple to use operator-owned trademarks while strictly controlling use of its brand, the imposition of rigid controls without a commitment covering delivery of devices, a requirement for operators to part-fund device repairs, Apple's right to terminate its operator contracts at will (in breach of domestic laws covering notice periods), access to operators' patents, and laws covering fair and equal treatment relative to rival device makers in terms of quality of service, sales commissions, the cost of providing a replacement device, and limits on the services offered to end-users.

Apple did not respond to BFMTV's request for a comment, and the news agency noted that operators are barred from issuing statements by their Apple contracts because the clauses are confidential.

The DGCCRF also declined to comment, the news outlet reported.

Apple CEO Tim Cook in January met with the EU competition commissioner Margrethe Vestager as part of an ongoing investigation into the company's tax arrangements in Ireland, Bloomberg reported.

At the time, Vestager said EC probes into Apple and Google's tax deals in the region were necessary to ensure a level playing field in Europe's digital market.

Earlier that month, the Telegraph reported that Apple was on the brink of issuing software to simplify the shift from iOS to Android smartphones, following complaints by European operators that the difficulty consumers experienced in switching effectively locked them into offering the iPhone.

For more:
- see this BFMTV report (in French)
- read this Bloomberg article
- view this Telegraph report

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