Is Apple Using Unfair iPhone Sales Tactics? European Commission Begins Investigation

Apple’s (NASDAQ:AAPL) sales tactics for its iPhone handsets are now under scrutiny by the European Commission, which is investigating whether the company is using unfair means to dominate rivals in the European market.

The Financial Times said it had obtained a nine-page questionnaire -- sent last week to several European mobile network operators -- which showed that the commission is mainly inspecting Apple’s distribution terms, which might favor the company by ensuring that its competitors cannot secure a better sales deal.

Through the questionnaire, the European carriers were asked whether the Cupertino, Calif., tech giant imposes any restrictions on a minimum number of iPhones to be ordered and on the use of marketing budgets. The questionnaire also inquired about any clauses that might guarantee that Apple would always get better subsidies and sales terms, in comparison to other smartphone manufacturers.

In addition, the carriers were asked whether Apple uses technical or contractual restrictions on the iPhone 5, which could limit the device’s compatibility on high-speed 4G networks in Europe.

“The Commission has information indicating that Apple and Mobile Network Operators (MNOs) have concluded distribution agreements which may potentially lead to the foreclosure of other smartphone manufacturers from the markets,” FT quoted the questionnaire.

“There are also indications that certain technical functions are disabled on certain Apple products in certain countries in the EU/EEA. If the existence of such behavior were to be confirmed, it might constitute an infringement" of antitrust law.

The inquiry follows complaints from mobile operators who recently submitted details of their contracts with Apple to the European Commission.

“We have been contacted by industry participants and we are monitoring the situation, but no antitrust case has been opened,” Antoine Colombani, a spokesman for Joaquín Almunia, competition commissioner of the European Union, told The New York Times.

While no formal antitrust probe has been opened against Apple yet, the FT report stated that before launching any such probe, the commission needs to be confident enough that Apple is the indisputable leader in the EU smartphone market.

However, given the growing popularity of Samsung’s Galaxy handsets, the commission noted that there are “good reasons to believe competition is strong” in the market. Apple told the Times that its contracts fully comply with EU laws.