Apple Inc. Business Policy v. Competition Law

Abstract

Competition policy rules consist of a mechanism providing to consumers production, which they want to acquire in the best and cheapest available way. This mechanism ensures that the undertakings seek the innovation of their production and push the prices down . In the official European Commission’s Competitive Law webpage it is clearly stated, that: “In order to be effective, competition needs suppliers who are independent of each other, each subject to the competitive pressure exerted by the others”. It is already clear, that free commercial market is very sensitive to any distortions from any destructive sources. Markets are especially being distorted in the most possible way when monopolies (derived from Greek monos, alone or single and polein, to sell) are being established. Abuse of dominant position is also a very complicated matter and significantly distorts competition while decreasing general welfare of consumers.This Article dedicated to quite specific and complicated issue. Apple Inc., a company that worldwide known for its achievements in technological innovations, is holding dominant position in the area of portable music players, digital online music distribution and is gaining dominant position in the mobile phones market area . Nicolas Petit , an associate in Howrey's Brussels office, where his practice focuses on EC competition and French competition law, prepared several articles where he talks about the abusive of dominant position of Apple Inc. in musical industry. In his presentation “Apple’s refusal to license its DRM - Fair-Play competition” Nicolas Petit argues, that Apple Inc. is abusing and violating the Fair-Play rules of commercial market in several ways . European Commission is also suspecting Apple Inc. of violating Competition Law because of the restriction of consumers’ choice, e.g. songs from the iTunes online store (owned by Apple Inc.) are not freely available to download across Europe, and that the prices vary between countries. Could it be concluded, that Apple Inc. uses its leading position in innovation, design and popularity of production in order to act abusively in the commercial market? On the other hand, maybe there are some strong arguments for the defence on the Apple Inc. side?Apple Inc. usually by lawyers, consumers, rival competitors considered as the second most visible actor in the role of abusive behaviour of a dominant position. Another legal entity - Microsoft Corporation is well known worldwide for its software production and unfavourable license terms. Microsoft Corporation stood against the European Commission in the case T-201/04 Microsoft v. Commission . In this case Microsoft Corporation was fined of EUR 497.000.000 because of tying one product into another (Windows Media Player 9 was included into the Microsoft Windows operational system). Can it be said, that Apple Inc. is starting to act similarly as Microsoft Corporation or other worldwide giant companies? Does Apple Inc. abuses its dominant position (in what ways) and what is the dominant position in particular? These are the main goals of the Article. However, any defending arguments for Apple Inc. position is highly welcome and to be considered. In addition, in this way of analyzing the particular situation of the dominant position (Apple Inc.) it is necessary to analyze the European Competition Law itself.While writing this topic, it is necessary to use various internet sources, because many internet (including official ones of the European Commission etc.) webpage covers useful and official information in this matter. In addition, several literature books, treaties and other valuable sources listed.The structure of the Article is as following (note that each section is written in the context of the Apple. Inc anticompetitive activities): firstly, legal basis of dominant position and abuse of dominant position is required. This chapter due to its scope is limited to European competition law. Secondly, profound legal overview shall be provided from the Competition Law position of the Apple Inc. production (iTunes, iPods, and iPhones) and business activities with it. In these 2 chapters shall be put all the efforts to fully uncover the situation - whether Apple Inc. really abuses its dominant position (it is already clear that Apple Inc. holds dominant position in the media market) , in what ways and what can be listed down for the defence of Apple Inc. itself? Is Apple Inc. really limiting the choice of consumers and their general welfare? These are questionable objects of discussion and analysis. Quick summary of conclusions is covered in the third chapter of Conclusions.