Apple Lands Fines In Taiwan Over Pricing Structures At Mobile Providers

Apple took something of a hit recently as the company found itself on the bad end of a 20 million New Taiwan dollar fine (around $666,800 U.S.) levied by the Fair Trade Commission in Taiwan. The fine came as a result of Apple's interference with area mobile service providers, as well as handset distributors, in terms of pricing, and though Apple has room to appeal, there may be other fines forthcoming if the company fails to comply with the rulings.

More specifically, the Fair Trade Commission found that Apple had violated article 18 of the Fair Trade Act in Taiwan by requiring the three main service providers in the country—Chunghwa Telecom, Far Eastone Telecommunication and Taiwan Mobile--to sell iPhones at certain prices. The commission further noted that Apple had no right to do so, particularly once Apple had sold distribution rights to the products in the country, and that the carriers in question had the right and the complete discretion to sell devices as desired.

Apple can engage in an appeal, as noted previously, but should it fail to comply with the Fair Trade Commission's rulings, reports suggest a separate fine may kick in at $50 million New Taiwan dollars ($1.667 million U.S.). Interestingly, it was only iPhones that were the subject of the Fair Trade Commission's investigation, and there are no plans currently to investigate issues of the iPad. Apple's Taiwan office, meanwhile, didn't comment on the issue.

Admittedly, the fines involved here likely won't prove onerous for Apple. A Wall Street Journal report from October 2013 suggests that Apple's cash hoard represented about 10 percent of all corporately-held cash in the United States with the exception of financial firms, so Apple shelling out about two-thirds of a million dollars likely won't represent a hardship. Still, it does send a fairly clear message to Apple—not to mention anyone else looking to do business in Taiwan—that interfering with local authority in terms of pricing structures won't be tolerated, and that a hands-off approach will be the way to go to avoid running afoul of authorities eager to prevent such practices.

Will this move have a chilling effect on Taiwanese businesses? Potentially, but not likely; after all, Taiwan represents a pretty substantial chunk of market in its own right, and its close proximity to mainland China certainly doesn't hurt either, even though there are plenty of issues between the two. If companies don't like the pricing structures engaged in by Taiwanese businesses, then companies will likely go elsewhere to do business, at the same time losing access to the Taiwanese market and potentially even conceding said market to competitors, which is seldom a development any business wants to engage in.

Still, this likely won't hurt Apple much, and likely won't hurt Taiwan much either, and at the end of the day, both sides should come out of this event with a new understanding and a decent chance of success all around.