French competition watchdog suspends iPhone exclusive deal with Orange

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The French competition watchdog has suspended the agreement between Apple and France Telecom of having the iPhone exclusively to customers of Orange, the No. 1 mobile operator in France. The Competition Council has said that the decision was to allow customers to get the iPhone with a contract with any other mobile phone operator in the country.

France Telecom has said that it intends to appeal the decision, and says that it places it in a different position to countries like Britain, Germany and Spain, where they have exclusive agreements with a carrier to distribute the iPhone.

“Orange notes that this decision places France in a radically different situation compared to countries such as the United States, Germany, the United Kingdom and Spain. Orange also points out that the launch of the iPhone in France was largely based on an industrial partnership in which Orange has heavily invested. This partnership has enabled a large number of people in France to benefit from innovative services at an attractive price,” France Telecom said in a statement.

“This decision is a serious blow. It calls into question the economic structure of the market and in particular, the different partnerships made between mobile operators and handset manufacturers working in the best interests of consumers and promoting innovation. By limiting all exclusive agreements to three months, operators will no longer be able to justify certain investments such as those made by Orange to launch the iPhone. These technical and commercial investments enabled Orange to offer a cutting-edge handset, coupled with innovative mobile Internet applications, to the wider public.”

“This decision, which will have a major impact on the market, was taken without any in-depth examination of the situation during a debate on conservatory measures. Unfortunately, this decision may have serious consequences on manufacturers, as well as their subcontractors and software suppliers, sectors that are already facing economic difficulties.”

Apple and France Telecom originally had a five-year exclusive deal, which the council said that it was “clearly excessive” and would risked putting “serious and immediate damage to competition on the mobile market and to consumers”. France Telecom also notes that it had sold over 450,000 iPhone 3Gs in one year.

An SFR spokesperson said that they hope to get a contract soon to sell the iPhone in the next few hours. “We are going to contact Apple to set up a distribution contract,” the spokesperson told Reuters. Bouygues Telecom, the No. 3 mobile operator and the source of the complaint, is also hoping to start selling the iPhone too.