Planned obsolescence: Italy sanctions Apple and Samsung, France investigation

The Italian authority guaranteeing competition and the market imposed Thursday a sanction of 5 million euros to the South Korean company and 10 million to the US firm for “unfair trade practices”. According to the lawyer of the association Hop, which filed a complaint against Apple in January, this fine comes to prove its merits. The prosecutor must decide on whether to continue in the coming months.

A first sanction fell. Pointed the finger in various countries because of suspicions of planned obsolescence, the two giants of smartphones, Apple and Samsung, have been inflicted for the first time sanctions on this issue Wednesday, October 24, 2018 by the Authority guaranteeing competition and the Italian market (AGCM).

“(…) The AGCM established that the companies (…) carried out unfair commercial practices violating articles 20, 21, 22 and 24 of the Code of the consumption, during the diffusion of certain updates the firmware of their phones, which have caused serious malfunctions and significantly reduced their performance, thus accelerating their substitution, “says the authority called” antitrust “in a statement.

“These companies have in fact induced consumers – insistently asking them to download, and because of the existing information asymmetry vis-à-vis producers – to install updates on devices not being able to support them, without providing them with sufficient information, nor the means to restore the initial functionalities of the products “, specifies the AGCM.

Insistent suggestions and lack of information
The authority, which opened an investigation in January following complaints from consumers, criticizes Samsung for having “proposed insisting, from May 2016”, the owners of a Note 4, the installation an update for Note 7, without informing them that it might cause malfunctions, and instead asking for large sums for the resulting non-warranty repairs. A sanction of 5 million euros has been imposed on Samsung.

As for Apple, the AGCM also criticizes him for having “insisting, from September 2016, to the owners of various models of iPhone 6”, to install the new iOS developed for the iPhone7, without the inform that the energy demand of the new software could cause problems. When, in February 2017, a new update was issued to limit these anomalies, consumers were not informed that it could reduce the speed of devices, regrets the authority. And it is only in December 2017 that Apple has planned the possibility of changing the batteries at a reduced price: before that date, no assistance measure was set up for out-of-warranty devices. A second offense also explains that the penalty imposed on the US company, 10 million euros, is twice that of Samsung. According to the AGCM, Apple is also guilty of not informing consumers of the average life and maintenance of lithium batteries.

New evidence in the French investigation
This landmark decision comes less than a year after the opening by the Paris prosecutor’s office of an investigation for obsolescence program against Apple, following a complaint filed by the association Hop. The charges are similar: the US giant is accused of pushing consumers to updates that caused a slowdown of old phones at the same time the release of new models. The association’s lawyer, Emile Meunier, therefore intends to use the Italian decision as a new piece of evidence against Apple, since it “brings water to the mill of his argument”.

“Once translated, I will send it to the Directorate General of Competition, Consumer Affairs and Fraud Control (DGCCRF), that the prosecutor’s office responsible for conducting the investigation”.

Admittedly, the context is quite different. While in Italy the sanction was pronounced by an independent administrative authority on the basis of the Consumer Code, the procedure opened in France is criminal in nature. It is based on an offense created in 2015, non-existent abroad and never yet applied in France. Hop had favored this path to possible civil or administrative actions because of the “symbolic and dissuasive effect” of criminal sanctions, as well as the means of investigation used by the prosecutor’s office, recently explained the association to La Tribune.

An “element of trust and more”
But despite these differences, the accusations made by the Italian antitrust to Samsung and Apple “are dangerously close to the crime of obsolescence programmed as designed in France”, since they imply “the desire to reduce the life of the product so to push for a renewal of the purchase, “says Emile Meunier.

“It is hard to imagine that we can have Apple sentenced in Italy where no planned crime of obsolescence exists yet, and not in France where it is provided by law,” adds the lawyer, for whom the Italian decision constitutes therefore an “element of trust and more”.

The DGCCRF should close its investigation before the end of the year, and the prosecutor decide on whether to continue in the following months. In case of prosecution, Emile Meunier does not exclude associating consumers victims at trial as civil parties. And in case of conviction, the sanction could reach 5% of the turnover of the company: the global one, to which we should refer according to Emile Meunier, exceeded in 2017 the 88 billion dollars.

Samsung is appealing
In December 2017, as a result of user complaints and tests relayed in the specialized press, Apple itself had acknowledged reducing the performance of certain models. The company, however, said it wanted to “prolong their life” of its phones to prevent them from going out unexpectedly. Other investigations against the American society in terms of planned obsolescence are also underway in the United States.

But in Italy, nothing is yet acquired. In a statement quoted by the Italian press, Samsung has already announced its decision to appeal the decision of the antitrust.

“Samsung has never released software updates with the goal of reducing the performance of the Galaxy Note 4,” he says. “On the contrary, Samsung has always offered software updates that allow its users to have the best possible experience.”

No press release has, to our knowledge, been released for the moment by Apple.

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