Apple Russia found guilty of price fixing on iPhones

Apple Russia found guilty of price fixing on iPhones
Opening of first Apple store in Russia in 2005.
By bne IntelliNews March 15, 2017

Apple Rus has been found guilty by Russia's Federal Antimonopoly Service (FAS) on fixing prices for a models of iPhone 5 and 6 series, Vedomosti daily and TASS reported on March 14, citing the deputy head of the regulator Andrei Tsarikovsky.

The ruling caps a string of cases where Russian authorities have applied pressure on foreign tech and digital companies. Earlier in March, Vedomosti sources said the FAS is also now considering slowing data traffic to websites of foreign companies defying the decisions of Russian courts.

In the Apple case, which saw a seven-month investigation by FAS, most retailers in Russia were reportedly setting the prices on the iPhones prior to the launch of the sales, which was coordinated with Apple Rus.

FAS also obtained emails that Apple Rus sent to retailers if it found the prices to be wrong, while the company also maintained the right to withdraw from supply agreements with retailers at any time unilaterally, although the agreements do not explicitly mention any price requirements.

The case was initiated in October 2015 on suspicions of price fixing on the new iPhone 6 and iPhone 6s models, which were launched at the same price by multiple Russian retailers simultaneously. However, the FAS did not find any evidence of price fixing on latest iPhone 7 model.

Lawyers surveyed by Vedomosti said, however, that Apple Rus will most likely have to pay a fixed fine of RUB1 to RUB5mn (€79,600), rather than a more sizable penalty calculated as the share of revenues.

FAS slapped a revenue-based fine of RUB438mn on US search engine giant Google Inc in August 2016 for abusing its monopolistic power and preinstalling its applications on Android smartphones in Russia. That case was initiated by Russian internet major Yandex as it faces increased competition from Google on mobile devices.

Other foreign internet majors getting in trouble in Russia include LinkedIn, with communications watchdog Roscomnadzor tweeting “R.I.P.” beside the networking website’s logo after banning it in early March for failing to comply with new data storage legislation. The social networks Facebook and Twitter regularly face demands to delete content that is ruled unlawful by Russian courts.