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Apple and Orange Lose Their Sweetheart Deal

A French watchdog agency has decided that the exclusive deal between Apple and France Telecom’s Orange is not fair and must be suspended. The suspension of the deal is set to take place no later than Thursday of this week. The reason for the short time frame for implementation is to give a chance to Orange rivals SFR and Bouygues Telecom to capitalize on holiday iPhone sales. An SFR spokesman said they were planning to begin selling the iPhone within a few hours of the decision, if Apple is cooperative.

Orange is not quietly accepting the ruling, and instead will be filing an appeal, on the grounds that exclusivity deals stand in Britain, Germany, and Spain, where the telecom industries are similar to France’s own. Orange’s deal with Apple covered a five year term, the same as AT&T’s in the U.S. The appeal process could take up to 12 months, and in the meantime, if Apple or Orange defy the councel’s ruling, they can be penalized with stiff fines.

The decision is the result of a September 18 complaint by Buoygues Telecom, which is France’s third largest cellular service provider. If it stands, it could influence other exclusivity deals between carriers and Apple, although probably much more so in Europe, where business and telecommunication regulations are similar between countries. It’s not likely that the decision will influence AT&T’s deal in the U.S., since competition regulations are not nearly as strict here as they are in Europe.

The current suspension is a temporary measure while the competition counsel investigates the matter more fully. It’s possible that fines could still be issued if Apple and France Telecom are found to be in serious violation of competition regulations.

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