Apple Rus Ltd. price coordination (The case was initiated based on a citizen’s complaint concerning the coincidence of prices set by the 16 main resellers)

Case

FAS Russia decision and determination on price coordination of 27 March 2017 No АЦ/20961/17 and of 27 April 2017 No 22/28644/17 (Russian versions only)

Parties

Apple Rus Ltd.

Jurisdiction

Federal Antimonopoly Service

Type

Price coordination

Assessment of fines

Apple Rus Ltd may pay a fine amounting to 1-5 million roubles

On August 8, 2016 the FAS Russia initiated proceedings having regard to signs of violation of Part 5 Article 11 of the Federal Law of 26.06.2006 No.135-FZ “On Protection of Competition” (prohibition to coordinate the economic entities’ activity) by Apple Rus Ltd. (Russia), Apple Holding B. V. (the Netherlands), Apple Sales Ireland (Ireland), Apple Operations International (Ireland), Apple Inc. (the USA)^[1]. The case was initiated based on a citizen’s complaint concerning the coincidence of prices set by the 16 main resellers (MTS, M.Video, Beeline, Eldorado, Evroset, OZON, Re:Store and others) for new models of the Apple’s iPhone 6s and iPhone 6s Plus smartphones.

The investigation showed that since the start of official sales of the Apple iPhone 5s, iPhone 5c, iPhone 6, iPhone 6 Plus, iPhone 6s and iPhone 6s Plus models in Russia, most of resellers fixed the same prices for the smartphones, as recommended by Apple Rus Ltd., and maintained them for approximately three months^[2]. 

In its final decision the FAS Russia established the following circumstances that allowed it to accuse Apple Rus Ltd.[3]:

- after the start of sales of new Apple iPhone models, the majority of resellers in Russia set and maintained for a certain period of time the same retail prices for smartphones iPhone 5s, iPhone 5c, iPhone 6, iPhone 6 Plus, iPhone 6s, iPhone 6s Plus, iPhone SE, at the level set in press releases published by Apple Rus Ltd.;

- representatives of Apple Rus Ltd. sent e-mails with price lists and press releases with retail prices for Apple iPhone smartphones from the apple.com domain to authorized resellers purchasing smartphones both from Apple Rus Ltd. and distributors;

- Apple Rus Ltd. monitored retail prices for Apple iPhone smartphones, fixed by resellers for online-stored and retail outlets, and if “inappropriate” prices were fixed, the Russian subsidiary of Apple sent e-mails to resellers asking them to change the prices;

- the retailers’ compliance with the recommended retail prices could have resulted from the provisions of the contracts between Apple Rus Ltd. and the resellers, according to which Apple Rus Ltd. can terminate contracts at any moment without any reasons;

-  purchase prices for Apple smartphones, as well as price-setting mechanisms used by resellers differ, and while determining prices different factors are taken into account (costs on transportation to the regions, advertisement costs, other costs related to the products’ retail sale, anticipated sales volume, etc.)^[4].

During the investigation Apple Rus Ltd. voluntarily terminated the violation.

In its final decision[5] the FAS Russia accused Apple Rus Ltd. of coordinating the prices, and as a result the company will be imposed a fine amounting to 1-5 million roubles (16,000-80,000 euros)^[6]. Apple Holding B.V., Apple Sales Ireland, Apple Operations International, Apple Inc. were not admitted guilty by the FAS Russia^[7].