Exclusive iPhone Deal Could Be Illegal in Australia
Published on: 26th February 2008
The release of Apple's iPhone in Australia this year could be illegal under the country's competition laws, say Queensland University of Technology law researchers.
QUT law researcher Dale Clapperton said "Despite there being at least two class actions in the US against Apple alleging violations of antitrust and consumer protection laws, Apple has released the iPhone in Germany, France and the UK with exclusive agreements with mobile carriers."
In France, while it is possible to buy an unlocked iPhone, the price is set at a deliberately prohibitive level to dissuade purchasers.
However, Mr Clapperton said that if Apple used this strategy in Australia it could come up against our third-line forcing laws which would make the strategy of forcing consumers to do business with another organisation illegal.
"Australia's competition laws may be uniquely suited to preventing this type of anti-competitive technological tying because they prohibit third-line forcing per se."
This position is explored in an article, published in the QUT Law and Justice Journal this month by Mr Clapperton and QUT's Professor Stephen Corones, analysing the implications of the technological locking of the Apple iPhone under Australia's competition laws.
"US financial analysts have calculated that AT&T is paying Apple a US$18-a-month 'commission' per iPhone customer which, of course, is ultimately paid by the customer," Mr Clapperton said.
"The digital locking of the iPhone forces consumers to use the mobile carrier nominated by Apple so that over the two-year contract term, the consumer would probably pay more in secret commissions to Apple than they paid for the iPhone in the first place."
Mr Clapperton said Apple's plans for releasing the iPhone in Australia had not yet been publicly announced but if its US marketing strategy were adopted in Australia, it would likely be prohibited by the Trade Practices Act 1974 (TPA) provision dealing with third-line forcing.
"This law will greatly simplify the task of seeking redress for such behaviour through the courts and could prove a deterrent for exclusive release of the iPhone with one carrier," Mr Clapperton concluded.