Bercy is demanding 48.5 million euros from Apple

“The Directorate-General for Competition, Consumer Affairs and Fraud Prevention filed a complaint against Apple in the Commercial Court and considered the contracts with mobile operators illegal.”

Apple is double in Bercy’s sights. On the one hand, the tax authorities launched an audit, as revealed Expressen. On the other hand, in an extremely rare approach, the Directorate-General for Competition, Consumer Affairs and the Prevention of Fraud (DGCCRF) attacked the California court of commerce in Paris, demanding 48.5 million euros.

Illegal clauses

Bercy’s services consider the clauses in the contracts between Apple and the four French mobile operators, which are also involved in the proceeding, to be illegal. For Bercy, these clauses “manifest the operator’s submission” to Apple, making the contracts “substantially unbalanced” in favor of Apple, in violation of the Commercial Code (Articles 442-6).

Under these contracts, the operators are in particular obliged to pay money to the company on the apple to pay for its advertisements, repair the phones and finance the promotion of the iPhone. Bercy therefore demands that Apple repay these amounts to the operators: 14 million euros to SFR, 11.6 million to Orange, 6.7 million to Bouygues Telecom and 8.2 million free. In addition, 8 million euros in fines.

In addition, Bercy also requests that 10 contract clauses deemed illegal be annulled (see box below). Note that all of these clauses are confidential, operators are prohibited from discussing them.

Jurisdiction disputed

One of the difficulties with the proceeding is that it was committed against the French subsidiary of Apple, but also one of its Irish subsidiaries, Apple Distribution International. For this, Bercy is dependent on one regulation European of 2007. But Apple, the defense in this case of the prestigious British company Freshfields, argued that French law had no jurisdiction because the contracts provided that any dispute should be settled by the courts of London. The Commercial Court has not yet ruled on this point, and has decided to bring this issue to the fore.

Apple also required to know the number of phones sold by each operator, the amount of subsidies, the number of applications downloaded… over a period dating back to 2007, even before the advent of the iPhone. But the court rejected it on this point.

No penalties on the AppStore

The case, which was finally to be dealt with within one to two years, started in 2013 with an investigation of Apple launched by Pierre Moscovici, Arnaud Montebourg and Fleur Pellerin, then proceeded with the filing of complaints in 2014.

It should be noted that since 2013, Apple has also been affected by a study by the Danish Competition Authority regarding the market for mobile applications, but which did not result in sanctions. When asked, the competition policeman states: “this exploratory investigation, carried out on our initiative, did not make it possible to reveal at this stage of problematic practice, but we are still very much on guard against the subject”.

When asked, neither DGCCRF nor Apple answered.

The 10 clauses considered illegal by the DGCCRF

The 1 operator must order a minimum volume over 3 years

The 2-operator can not determine its own pricing policy

3-operator contributes money to an advertising fund used at Apple’s discretion

The 4-operator finances the promotion of the iPhone in stores by the operator, which commits to a minimum of expenses

5-Apple is free to use the brands belonging to the operators, while Apple strictly controls the possibility that the operator can communicate on Apple brands

The 6 operator is subject to strict order conditions, while Apple does not undertake to respect orders and deliveries

The 7-operator participates in the cost of repairing the terminals

8-Apple has a unilateral right to terminate the contract without giving notice in accordance with the law

9-Apple is free to use the operator’s patents

10-Apple obtains conditions that are at least as favorable – or more favorable – than the conditions of competing manufacturers at non-bundled prices; quality of service; commissions paid to salespeople; the cost of borrowing a replacement unit; limitation of the services offered to customers.

Source: Bercy complaint against Apple

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