Russia finds Apple guilty of ordering iPhone price fixing with local retailers

Posted:
in iPhone
Apple did indeed engage in price fixing by ordering 16 Russian retailers to lock in specific prices for iPhones, the country's Federal Antimonopoly Service ruled on Tuesday.




If a retailer was discovered selling iPhones at an "unsuitable" price, Apple would contact them and ask them to change the price or risk losing their sales agreement, the FAS said, as quoted by the Financial Times. Apple is said to have "actively cooperated" with the agency during the investigation process, and agreed to make changes to avoid future conflicts.

The FAS found that from 2013's iPhone 5s through to 2015's iPhone 6s, resellers typically stuck to the prices recommended by Apple Russia for about three months.

Apple could face a penalty as high as 15 percent of its Russian sales, but lesser options are available. A decision won't be made for months. In the meantime, the company has three months to launch an appeal.

The FAS launched its investigation in August, following a complaint that resellers were all selling the iPhone 6s and 6s Plus for the same price -- despite their theoretically being in competition with each other.

Apple is known to maintain strict price controls in many markets, including the U.S, for the first critical months of an iPhone's product cycle. This helps prop up profit margins, and is more likely to steer shoppers towards buying from Apple directly, since there's little benefit to going elsewhere and the company generally has more inventory.

Prices are allowed to vary somewhat as new iPhone models approach, presumably to keep sales going and clear out old stock. Late last year Apple also relaunched sales of refurbished iPhones, though only for the 6s and 6s Plus, not 7-series models.

Comments

  • Reply 1 of 15
    foggyhillfoggyhill Posts: 4,767member
    Blah blah blah blah, Apple mostly locks down prices everywhere; this is basically just some extortion game.

    Everything related to Russia just requires a bigger envelope to be resolved...
    And it seems Apple has not reached that level yet...
    I'm sure this will convince them to go deeper in their pockets.

    Most of my friends are Russians, from Kaliningrad, St Petersburg and Moscow and I won't tell you what they think of current Russia.
    Because they still got family there and because their high profile positions, they're afraid to talk openly. That tells you everything.

    SolijeffharrisStrangeDaysr00fus1cornchip
  • Reply 2 of 15
    Me thinks that the Russian government is being less than honest about these charges. In truth, accurate acronym for the agency unhappy with the dealings of Apple is most likely the FSB, Russian Security Services, not the the FAS. Likely that Apple has not been quite compliant enough with the internal/external spy agencies.
    edited March 2017 NemWanjeffharrislkruppcornchip
  • Reply 3 of 15
    jbdragonjbdragon Posts: 2,244member
    Is not Apple getting the same price for hardware no matter who sells it?  If these stores selling the iPhone don't want to sell at the recommended terrain price and take a price cut, then that's on them. Allow them to do it and get into an price war and make zero profit. Apple still makes their own profit as they sold the iPhone.
    [Deleted User]
  • Reply 4 of 15
    jbdragon said:
    Is not Apple getting the same price for hardware no matter who sells it?  If these stores selling the iPhone don't want to sell at the recommended terrain price and take a price cut, then that's on them. Allow them to do it and get into an price war and make zero profit. Apple still makes their own profit as they sold the iPhone.
    Part of the agreement in being an "authorized reseller" may contain conditions about selling above or below MSRP.  Such conditions may be legal in some places, and not others.  So it may or may not be that the reseller can charge what they want for a product.  Manufacturers view discounted prices as damaging to their brands, and don't want prices to spiral down for that, among other, reasons.  Some vendors may have opaque pricing, available only to existing customers, which may avoid the problem, but they usually can't advertise that price list.
  • Reply 5 of 15
    SpamSandwichSpamSandwich Posts: 33,408member
    Not a good strategy to keep selling product in Russia, IMO.
  • Reply 6 of 15
    lkrupplkrupp Posts: 8,991member
    A Russian ‘antimonopoly agency’? That’s about the biggest oxymoron I’ve seen. Sounds like a routine Russian shakedown. Maybe ‘Sergei’ didn’t get paid enough protection money. No matter, Apple should send in Baba Yaga , I mean John Wick, to clear some minds on the subject.
    watto_cobra
  • Reply 7 of 15
    seanismorrisseanismorris Posts: 1,624member
    Bribed the wrong people?

    So sad...that's going to cost you!
  • Reply 8 of 15
    jbdragon said:
    Is not Apple getting the same price for hardware no matter who sells it?  If these stores selling the iPhone don't want to sell at the recommended terrain price and take a price cut, then that's on them. Allow them to do it and get into an price war and make zero profit. Apple still makes their own profit as they sold the iPhone.
    Part of the agreement in being an "authorized reseller" may contain conditions about selling above or below MSRP.  Such conditions may be legal in some places, and not others.  So it may or may not be that the reseller can charge what they want for a product.  Manufacturers view discounted prices as damaging to their brands, and don't want prices to spiral down for that, among other, reasons.  Some vendors may have opaque pricing, available only to existing customers, which may avoid the problem, but they usually can't advertise that price list.
    ^ this. but key point is the "maybe legal in some places and not others." It's another example of Apple doing business worldwide using USA terms/laws/practices, price fixing is a big no-no in Europe/UK etc. too and if it's found to happen here, there will no doubt be follow-up action in due course.

    If a company sells it's product to a reseller then they should be free to do what they want with it - if the company is not happy with how the reseller is behaving then they can simply stop selling to them to protect the brand/value. Imposing strict minimum sales numbers, specific pricing, product placement and sales techniques, is overstepping the mark. 
  • Reply 9 of 15
    DenisVolinDenisVolin Posts: 5unconfirmed, member
    foggyhill said:
    Blah blah blah blah, Apple mostly locks down prices everywhere; this is basically just some extortion game.

    Everything related to Russia just requires a bigger envelope to be resolved...
    And it seems Apple has not reached that level yet...
    I'm sure this will convince them to go deeper in their pockets.

    Most of my friends are Russians, from Kaliningrad, St Petersburg and Moscow and I won't tell you what they think of current Russia.
    Because they still got family there and because their high profile positions, they're afraid to talk openly. That tells you everything.

    Well, I don't know about your friends, but personally I don't have such problems. Moreover according to the US main stream media I should have even more since I'm gay, and, yet, nope, I don't. 
    I live in Moscow region and I don't have any problems to talk or discuss anything openly. Personally I'm just happy to live here. I've got everything I need for it: a job, a hobby, fast Internet and mbp mid 15 =) and friends.
    As for the bribery accusations, I'd say that Apple as any other company should either follow the legislation or join MS' LinkedIn fate. As well as any other entity should. The bribery is now not really a solution as it used to be 10-15 years ago.
    tommikelegatorguy
  • Reply 10 of 15
    MacProMacPro Posts: 19,251member
    Using 'Russia' and 'Fixing' in the same sentence seems strangely apt.
  • Reply 11 of 15
    tommikeletommikele Posts: 450member
    foggyhill said:
    Blah blah blah blah, Apple mostly locks down prices everywhere; this is basically just some extortion game.

    Everything related to Russia just requires a bigger envelope to be resolved...
    And it seems Apple has not reached that level yet...
    I'm sure this will convince them to go deeper in their pockets.

    Most of my friends are Russians, from Kaliningrad, St Petersburg and Moscow and I won't tell you what they think of current Russia.
    Because they still got family there and because their high profile positions, they're afraid to talk openly. That tells you everything.

    We all know Russia is what it is and what most reasonable Russians think about Vlad the Impaler, but to infer that this may be any different than any non-western countries where Apple operates is naive. The "extortion game" you speak of is played in every country. It just takes on a variety of appearances. Do you want to go over what happened in India? China? The EU? In the end there is no difference.

    If you want to sell your product and operate in another country you do it by their rules or try to negotiate exceptions. America is no different for foreign operations coming here. We may have more fair and transparent markets and an environment that make illegal behavior more difficult to get away with, but the game isn't any different. It's business in the international arena.

    And the little editorial stuff about your friends is to what purpose? You could tell us exactly what they think. Are you somehow required to disclose their names on this page or where they actually live? My stepson's finance is Russian and most her family is still there. They are upper middle class and do well and I know exactly how they feel and the game they must play as does everyone else. You were doing okay until you decided you needed to sensationalize a bit to give your comment more credibility. All you accomplished was the exact opposite.
    edited March 2017 gatorguyDenisVolin
  • Reply 12 of 15
    anton zuykovanton zuykov Posts: 1,056member
    Me thinks that the Russian government is being less than honest about these charges.
    When you say phrase "Russian government", adding words "dishonest", "less than honest", etc is redundant.
    SpamSandwich
  • Reply 13 of 15
    tommikeletommikele Posts: 450member
    adm1 said:
    jbdragon said:
    Is not Apple getting the same price for hardware no matter who sells it?  If these stores selling the iPhone don't want to sell at the recommended terrain price and take a price cut, then that's on them. Allow them to do it and get into an price war and make zero profit. Apple still makes their own profit as they sold the iPhone.
    Part of the agreement in being an "authorized reseller" may contain conditions about selling above or below MSRP.  Such conditions may be legal in some places, and not others.  So it may or may not be that the reseller can charge what they want for a product.  Manufacturers view discounted prices as damaging to their brands, and don't want prices to spiral down for that, among other, reasons.  Some vendors may have opaque pricing, available only to existing customers, which may avoid the problem, but they usually can't advertise that price list.
    ^ this. but key point is the "maybe legal in some places and not others." It's another example of Apple doing business worldwide using USA terms/laws/practices, price fixing is a big no-no in Europe/UK etc. too and if it's found to happen here, there will no doubt be follow-up action in due course.

    If a company sells it's product to a reseller then they should be free to do what they want with it - if the company is not happy with how the reseller is behaving then they can simply stop selling to them to protect the brand/value. Imposing strict minimum sales numbers, specific pricing, product placement and sales techniques, is overstepping the mark. 
    As a manufacturer and creator if a product why should I be forced to allow a reseller to do whatever he wants?

    I have invested huge sums of money in R&D, creating a product, building a brand, marketing and creating an image I decide is appropriate for my product. Why shouldn't I be able to set parameters for it's sale and distribution? A free market is where my parameters should come from.

    If you don't like the deal I offer, don't agree to it and move on to another company in the same business. If I am making bad judgements and push away my end users/consumers, the free market of choice they have access to will punish me very quickly and I will change very fast or go out of business or be fired by my stockholders.

    Controlling the entire market and abusing that along with preventing other companies from entering a market or offering their product to consumers is a different story and warrants appropriate regulation and action should such violations occur.
    edited March 2017
  • Reply 14 of 15
    SpamSandwichSpamSandwich Posts: 33,408member
    Me thinks that the Russian government is being less than honest about these charges.
    When you say phrase "Russian government", adding words "dishonest", "less than honest", etc is redundant.
    And if we're being realistic about it, using the words "honest" and "government" together to describe ANY country's government would be an example of an oxymoron.
    edited March 2017 DenisVolin
  • Reply 15 of 15
    anton zuykovanton zuykov Posts: 1,056member
    Me thinks that the Russian government is being less than honest about these charges.
    When you say phrase "Russian government", adding words "dishonest", "less than honest", etc is redundant.
    And if we're being realistic about it, using the words "honest" and "government" together to describe ANY country's government would be an example of an oxymoron.
    Short asnwer to that is NO, especially if you are being realistic.

    In the US, even if a group of politicians decides to bend over a company, that will not go too far. Courts still work.
    However, in Russia there are NO courts that would protect you from the govt. 
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