iPhone unlocking 'OK', says EU consumer chief

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Apple's commercial practice of making its popular iPhone available exclusively to selected mobile operators could be considered unfair and therefore not binding on consumers, said EU Consumer Commissioner Meglena Kuneva.

According to European rules, "a contract term which has the object or effect of limiting consumers' freedom to choose a telecom operator may, in some cases, be regarded by a national court as unfair and therefore not binding on the consumer", reads a letter Commissioner Kuneva sent in reply to a question from Socialist MEP Said El Khadraoui. Thus, if consumers unlock their iPhone, they might not be considered in breach of the rules, she said.

The Commissioner referred in particular to the Unfair Contract Term Directive which aims to "prevent significant unbalances in the rights and obligations of consumers on the one hand, and sellers and suppliers on the other hand", reads the letter. The directive is currently under scrutiny concerning potential amendments in order to better protect consumer rights. In his original question, El Khadraoui referred to the Unfair Commercial Practices Directive, but Commissioner Kuneva commented that "the Commission has no enforcement powers regarding these rules".

After the launch in the United States, Apple began selling its iPhone in Europe in November, but only to the British, German and French markets. In the UK, consumers can only buy devices locked to O2, the operator which struck the exclusivity deal in Britain with the American giant. In Germany and France, two versions of the iPhone circulate, one locked to a national operator (T-Mobile in Germany and Orange in France), and one unlocked but more expensive.

Speaking at the European Parliament in Strasbourg, Mr El Khadraoui said yesterday: "I am concerned that phone users are forced into exclusive contracts with specific phone companies if they want to have popular mobiles such as the iPhone. Consumers should be free to choose the phone they want and the company they want to make calls with. Exclusive deals that lock people into contracts with specific phone companies are unfair".

Questioned on the topic, Competition Commissioner Neelie Kroes' spokesperson did not comment. Commissioner Kuneva admitted in her letter that it is unlikely that the case could be considered as a violation of competition rules. Whether or not there is a violation of the EU antitrust rules, she said, "depends on a range of factual, economic and legal issues. Apple is not dominant in the market for mobile handsets. Likewise, the operators that distribute the iPhone in the UK, France and Germany are unlikely to be dominant in their respective markets".

Under pressure from the European Commission, Apple last week agreed to bring an end to the price unbalance among its European iTunes online shops by decreasing the charge for downloading music in its British electronic boutiques (see Euractiv 10/01/08). 

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