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Apple Pledges $84 Million to Correct Unfair Practices in Settlement with Korea's Fair Trade Commission



Last July Apple asked South Korea's Fair Trade Commission to adopt a consent decree to end dispute over competition law. This past June we reported that the case against Apple was winding down if Apple followed corrective measures that included Apple would lower the burden of costs for advertising their products through local carriers. The deal would also include ways to eliminate the lopsided terms, stop the interference, and prepare some fund for a constructive relationship with small businesses, program developers and consumers.


Reports out of Korea this morning state that Apple Korea will spend 100 billion won ($84 million) to set up an R&D center and improve its customer services in a settlement reached with the Fair Trade Commission (FTC), which investigated the company over suspicions that it abused its market power in advertising deals with domestic telecom firms.


The FTC revealed Monday the details of a provisional consent order proposed by Apple Korea. A consent order is an agreement between a company being investigated and the antitrust agency in which the former pledges to correct problematic practices without a judgment being made on the legality/illegality of the practices.


In the provisional order, Apple Korea pledged to reveal its procedures for advertising deals and give partial discretion to the telecom carriers in planning advertising. This does not exempt the carriers from paying for the advertising costs for iPhones, but will reduce the burden and allow them to join in the planning of the ads. In addition, Apple Korea pledged it would remove clauses in its contracts compelling the carriers to shoulder repair costs.


Along with the pledges regarding carriers, Apple Korea also unveiled a 100 billion won plan to promote mutual growth with small- and medium-sized enterprises (SMEs) here and improve customer services.


Over the next three years, Apple Korea will spend 40 billion won to establish an R&D center and run education programs helping domestic SMEs to improve their manufacturing processes. The company has earmarked 25 billion won to set up an academy for developers with the goal of nurturing 200 info-tech specialists every year.


"The consent order is designed to serve the public, thus it does not include direct compensation to the domestic carriers," an FTC official said. For more on this, read the full Korea Herald report.


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