A French consumer and fraud organization known as la Direction Générale de la Concurrence, de la Consommation, et de la Répression des Fraudes has filed a lawsuit against Apple Inc. (NASDAQ:AAPL).
The DGCCRF took the case to the Commercial Court of Paris claiming that the tech firm has been abusing its market power in the country. The French organization claims that Apple’s contracts with carriers in France were set up in such a way that they benefit the firm in ways that violate the country’s competition regulations. The DGCCRF also pointed out at least ten clauses in the contracts that it claims are illegal.
Click Here For More Market Exclusive Updates & Analysis
The clauses required the carriers to purchase a minimum number of iPhones in three years. Another clause required them to contribute some of the funds used in warranty repairs as well as contributing funds to iPhone advertising. The company also has a clause stating that it can freely use carrier brands, but the carriers cannot use Apple’s brand freely. A few other clauses have been mentioned, and they are all in favor of the company.
If the court finds the tech company guilty of misusing its market dominance in France through the stipulated clauses, Apple will have to pay a fine of more than $55 million. $46.1 million will be subtracted out of the total fine, and it will be distributed among the carriers mentioned in the lawsuit. The carriers include Free Mobile, Bouygues Telecom, Orange and SFR and the remaining funds will be paid out as fines.
Apple has previously been accused of having unfair dealings with carriers. A Canadian federal competition regulator launched a probe in December 2014 to determine whether the company had forced Canadian carriers to set higher prices for iPhone rivals. The company was fined $650,000 by Taiwan’s government in June 2015 for forcing carriers to stick to contract pricing conditions that Apple had enforced. The contract cases highlight how the company has been using its dominance to take advantage of carrier contracts.