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Apple Fined For Controlling iPhone Pricing In Taiwan

By Sam Lehman | Dec 26, 2013 04:46 AM EST

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The Taiwan Fair Trade Commission has slammed Apple with a fine of NT$20 million (US$663,332) for fixing iPhone prices at local stores and dictating pricing plans to telecommunication carriers.  

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For the first time, Apple has been slammed with a fine for controlling the price of iPhones available at local stores. The Taiwan Fair Trade Commission fined Apple NT$20 million (US$663,332) for violating Taiwan's free-trade laws. The agency requires the Cupertino-based tech giant's unit-Apple Asia to stop the practice following an official documentation from the government, or be prepared for further charges.

The antitrust agency found that Apple's practices violated article 18 of the Taiwan's Fair Trade Act by restricting three local carriers from setting their own prices for contract-based iPhones, and further asking the operators - Chunghwa Telecom, Far Eastone Telecommunications and Taiwan Mobile, to submit pricing plans for approval. Apple also recommended changes in the carriers' pricing plans.

"The commission's ruling makes Taiwan the first country to fine Apple Inc's subsidiaries concerning their handset distributors' pricing, while there is a similar ongoing investigation concerning Apple Inc for impeding competition in Europe," Taipei Times quoted Fair Trade Commission Vice Chairman Sun Lih-chyun as saying in a statement.

"If Apple Asia hired local companies to provide services and sell iPhones, the company can set prices for them. However, based on the contracts between Apple and their handset distributors, the company actually sold its iPhones to local companies, therefore local companies should have the right to set prices themselves."

Apple could face additional fines if the company does not stop interfering with the carriers' pricing plans. According to the report, Apple could get up to NT$50 million fine for continued violation of the free-trade policy.

The three local carriers are major distributors of iPhones. Sun said that 90 percent of iPhones sold in Taiwan are through these three companies, with most of them being tied to a contract. The total sale of iPhones in Taiwan accounts for 1 percent of Apple's global iPhone sale.

Apple is hoping to dominate in the Chinese smartphone market. It recently signed a deal with China Mobile, the world's largest mobile wireless carrier, earlier this week.

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