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Korea's FTC likely to Decide next week whether to Pursue a case against Apple for Ad-Cost Dumping on local mobile carriers

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In late 2017 Patently Apple posted a report titled "Korea's FTC Investigating Wireless Carrier Complaints about Apple's Unfair Advertising Policies," followed by a 2018 report titled "Korea's Wireless Carriers Rev Up their War against Apple's Promotions Policy with Threats of Legal Action and more."


It's being reported today that Korea's Fair Trade Commission (FTC) will hold a meeting next week to decide whether the antitrust agency will accept Apple Korea's pledge to fix its alleged ad cost dumping on local mobile carriers.


The meeting has been drawing attention as it will decide whether the FTC will continue to investigate allegations that the U.S. tech giant has abused its market power over telecom providers, or close the case without questioning the illegality of such a practice. Chairwoman Cho Sung-wook has already hinted that she will take a closer look into the case.


According to the FTC, Cho will convene the meeting Sept. 25 to decide whether to accept Apple Korea's filing of a consent decree regarding the company allegedly abusing its market power in deals with the carriers.


The timing of this is important as Apple will be launching new iPhone starting this Friday. Local wireless carriers want to know if they will be forced to continue to pay for ads and services imposed on them by Apple or whether major changes will be made to alter Apple's advertising policies taking effect immediately.


An FTC official told the Korean publication that "Apple Korea's filing of a consent decree will be discussed at the meeting, but we cannot guarantee whether a decision will be made or if they will schedule additional meetings. There is no rule on how many meetings could take place.


The case entered a new chapter in June, after the FTC announced that Apple Korea had filed a consent decree, a "partial surrender" that meant it would end some of the problematic practices. The FTC did not reveal the details of Apple Korea's filing, but it was assumed to contain a plan to revise contracts with the local telecom firms over advertising costs.


If the FTC accepts the filing and begins the consent decree process, Apple Korea will carry out the corrective measures and the commission will close the case. If the FTC rejects the filing, however, its investigation will continue.


"If the FTC rejects the filing, it can become another global precedent finding the U.S. tech giant's business practice as unfair, since Apple uses similar policies of passing on iPhone marketing costs in other countries," an official at a local telecom company said.


But chances of the case being closed are not high, given that Cho has already stressed the importance of the case. In a press conference as a nominee last month, she mentioned the ongoing FTC cases of Apple, Google and Naver and pledged the agency would take a closer look into them.


The track record of the FTC's acceptance of consent decrees is not on Apple's side. Since December 2016, the agency has dismissed four filed by Qualcomm, Hyundai Mobis, LS Group and Golfzon. When the FTC dismissed Qualcomm's request in December 2016, it said it would not accept critical and obvious illegalities in consent decrees.


Other countries have already taken a hard stance on Apple. In April 2016, France fined the company 48.5 million euros (64 billion won) for having mobile carriers pay for ads. In 2013, Taiwan slapped a 700 million won fine on the company Apple for controlling iPhone prices.


Apple Korea has been passing on TV commercial costs for its iPhones and iPads to SK Telecom, KT and LG Uplus. The carriers are also shouldering the costs of a "free" repair service. The wireless carriers are claiming Apple has abused its superior position to force them to do this.


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