Taiwan fines Apple $666K over iPhone pricing

[ForgoTheConsequence]

Source: cnet

The country's Fair Trade Commission finds that Taiwan's three main mobile service providers have been submitting pricing plans to Apple for approval, which violates the law.

Taiwan's Fair Trade Commission has fined Apple 20 million New Taiwan dollars -- about $666,000 -- after determining the company has been illegally interfering with iPhone pricing in the country, The Wall Street Journal reported Wednesday.

The commission found that Apple was telling Taiwan's three primary mobile-service providers how much to charge for iPhones.

"Through the email correspondence between Apple and these three telecom companies we discovered the companies submit their pricing plans to Apple to be approved or confirmed before the products hit the market," the commission said in a statement, according to the WSJ. The newspaper could not reach Apple for comment.

Read more: http://news.cnet.com/8301-1035_3-57616283-94/taiwan-fines-apple-$666k-over-iphone-pricing/

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Looks like Apple didn't learn their lesson when it comes to price fixing.

[seattledo]

1. Great

Now their xtian stockholders are going to complain about persecution. Why couldn't they have picked a different number?

[cprise]

2. The first Apple product was $666

That's why they picked it.

[quadrature]

3. so, how much $ are we talking about?

the telcos said how much?

and Apple wanted them to charge??


please be specific if possible

[JustAnotherGen]

4. $765 US

http://www.chinapost.com.tw/taiwan-business/2013/10/25/392088/Cost-of.htm


WSJ has more detail than CNET http://online.wsj.com/news/article_email/SB10001424052702304475004579279523694907870-lMyQjAxMTAzMDIwNTEyNDUyWj

[quadrature]

9. Apple wanted a lower final price?

or a higher final price
that the telcos wanted ?

again, please be specific if you can be

[JustAnotherGen]

11. Word inside industry

Last edited Mon Dec 30, 2013, 09:32 AM - Edit history (1)

Is they were pushing for lower.

Keep in mind its right in front of you. They set that handset at COG - and those telcos will take a bloodbath with that.

Asia is the highest market for ill gotten I phones.

One guy we busted this summer in L.A. actually came over from China to meet his largest "supplier" who had PALLETS of stolen phones from our company in his "warehouse" . . . They start at 1000 to 1250 over there on the black market. START at that.

And Apple has a pricing problem in general.

As well as serious jailbreak problem and in Asia - no carrier would be stupid enough to NOT mark it up and earn a decent margin on it. Why shouldn't they be able to compete with thieves selling phones stolen from them?

I know all of those carriers because my last role in my marketing life was the outside the US service product manager. Those are very acute business people and its a different set of rules.

I'm just glad they are bringing it to market FOR Apple and China is getting in the game so we can stop bleeding. Now the thieves will steal their accounts to get ahold of them.

Anything else I can't get into. All of the above is pretty common knowledge in industry if you just put a little effort in.

[jamzrockz]

5. How do you even determine price fixing?

This is not like oil, they are the only ones that make apple phones and they alone "fix" the whole sale rice to sell to distributors(mainly apple stores). So how exactly can one determine price fixing with something they alone make?

I understand collusion in areas like oil or even farm products where different producers band together to raise the prices for said commodity. This is just apple setting price of their phone.

[ProfessorGAC]

6. Seems Like Apple Would Be Setting The Wholesale Price . . .

. . .to those that then sell it. If a telcom wants to lock in contracts by using the phone as a loss leader, not sure it's legal for Apple to interfere with pricing to the consumer, and it certainly isn't to enforce the pricing across multiple entities they do now own.

That meets the definition of price fixing as described in Smith and Roberson's Business Law textbook.
GAC

[jamzrockz]

7. I see

But fast food companies makes deals like that with their franchisees all the time and nobody bats an eye lid.

[ProfessorGAC]

8. Perhaps That's Because The Margins Are So Thin

McD's probably doesn't worry about one franchisee undercutting another, because there is not that much margin to work with. And, the other benefit to toeing the company line on a fast food franchise is that they do all the advertising. One still has to pay the fees and skim, but there is a huge overhead benefit to following the path laid out.

Not the same deal here. The telcom's don't make their money selling phones. They make it by charging for the connectivity. So, discounting a phone isn't a matter of the margin on the retail price of the phone. It's about securing cash flow by signing people up to 2 or 3 years. Makes forecasting revenues and expenses much easier.

I see where you're going, but the two market segments are so different i don't think it's an apt comparison.

[JustAnotherGen]

12. Correct

We don't make a thin red cent selling phones. With the theft of iPhones and Samsungs - we lose a tremendous amount of money. Hence why the model has to change. It worked well in the 80's and 90's and early 2000's - but with market saturation we have to move to the copper line model . . . You get the sim card and service from us but go to a box store or electronics store for the handset - same as one would for a tv, copper line or VoIP handset, stereo for a wireless radio service etc etc.

However - read up thread. IPhones are NOT new to this market. The wireless companies there are simply going to need to price them competitively - they should start at $850/$900 a piece. Unlocked iPhones start at $1K on the street in Asia. They will also be able to offset their losses on the theft phones.

[sir pball]

10. Price controls are sometimes written into the franchise contract

Which makes it legal, if not ethical. And sometimes if you look at the fine print on the McAds, it says "At participating locations". Unless Apple and the telcos had a contract specifying that Apple had final approval of the retail prices of the devices, it's illegal.