Apple took unfair profits: Korea FTC

Korea’s corporate watchdog claimed Apple Korea has bargaining power over local mobile carriers and that it has reaped unfair profits from them in a statement Monday. According to the Fair Trade Commission (FTC), experts called in by the antitrust body said Apple Korea exploited its market position to place part of its advertising costs on local telecommunications companies.

The statement comes after exchanges between the FTC and the iPhone maker during a deliberation on the company’s position on Jan. 16. It was the second round of hearings since the first deliberation in December.

Apple Korea has been under investigation by the FTC since 2016 on whether it forced carriers to pay advertising and warranty costs.

Korea’s fair trade law prohibits abuse of one’s position during a transaction.

Apple Korea claimed through its expert witnesses, which included economists and business experts, that it does not have leverage over local carriers and defended its actions, saying that its advertisement fund was able to help all parties involved.

The experts also argued that Apple’s involvement in advertisements was justifiable to maintain the iPhone brand.

Expert witnesses for the FTC responded that Apple Korea can be regarded as being in a position of power over carriers and that the advertisement fund served to collect additional profit from them. They also stated that the company’s activities in taking part of carrier advertisements cannot be seen as part of their branding strategy.

The FTC’s Economic Analysis Division provided similar analysis to those made by its witnesses.

The hearings on the investigation will continue, with the third round of deliberations scheduled for Feb. 20.

The antitrust body said that the third hearing will discuss specific actions made by Apple. It is unclear whether the third hearing will be the last.

If found to have abused its position, Apple Korea could face fines worth up to two percent of its related sales.

The iPhone maker has a history of trouble with the FTC.

The company made corrective measures under the corporate watchdog for its product replacement policy back in 2011 and its services agreements with local companies in 2016.