CCI rejects mkt abuse charges against Airtel, Vodafone, Apple

Fair trade regulator CCI today dismissed charges of anti-competitive practices and abuse of dominant market positions in agreements signed by telecom majors Airtel and Vodafone with global technology giant Apple with regard to the sale of iPhone smartphones in India.

The order, issued by the Competition Commission of India (CCI) today, follows an over one-and-a-half years probe by its investigative arm into complaints that Bharti Airtel, Vodafone (formerly known as Vodafone Essar), US-based Apple Inc and its Indian subsidiary abused the dominant positions in their respective markets for smartphones and GSM cellular services.

Apple makes the popular high-end smartphone device iPhone along with other products like Mac computers and iPad tablet PCs, while Airtel and Vodafone are two major telecom service providers of the country.

The CCI probe was focussed on a particular variant of iPhone, iPhone 3G/3GS and it was alleged that Apple had entered into "some secret exclusive contracts/agreements" with Airtel and Vodafone for sale of iPhone in India, even prior to its launch.

In the complaint filed by an individual, it was alleged that Airtel and Vodafone got exclusive selling rights for undisclosed number of years as a result of their respective agreements with Apple and they had abused their dominant market positions.

The complaint further said that iPhones sold by Vodafone and Airtel were compulsorily locked so that the handset purchased from either of them would work only on their respective networks and none other.

However, CCI said in its order that it did not find Apple Inc, Apple India, Vodafone and Bharat Airtel of being in a dominant position in their respective relevant market.

"No appreciable adverse effect on competition in the market of smart-phones and/or mobile service has been established...Accordingly, the case is ordered to be closed," CCI said in its order.

Following receipt of the complaint, CCI had asked its Director General in August 2011 to probe into the allegations, but the investigation did not find any violations of competition laws in the agreements between the companies.

As per the DG, Apple had also approached other telecom operators like Reliance Communications, Idea Cellular, Tata DoCoMo for a distribution agreement to sell iPhone but it did not materialise.

Besides, the investigation did not reveal any appreciable adverse effect on competition in the cellular service market in India, the CCI order said.

Citing findings by the DG, CCI noted that no operator has more than 35% market share in an otherwise competitive mobile network service market.

CCI further said that there is no restriction on consumers to use the network services of Vodafone and Airtel to the extent that the network services can be availed on any mobile phone, even an unlocked iPhone purchased from abroad.

"On the other hand, Commission has reasons to believe that the distribution arrangement between the impugned parties helped create a market for iPhone in India wherein domestic consumers got an opportunity to purchase a contemporary handset which was otherwise available through the grey market," CCI said.

"The Commission does not find any evidence to show that entry-barriers have been created for new entrants in the markets i.E. Smartphone market and mobile services market by any of the impugned parties," it added.