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Are Japan's Antitrust Regulators Targeting Apple?

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Are Japan's Antitrust Regulators Targeting Apple?

Reuters reported Friday morning that Japanese regulators may take action against Apple Inc. (NASDAQ: AAPL) for potential antitrust violations.

Reuters cited a report written by Japan's Fair Trade Commission (FTC), which said that major telecommunications carriers including NTT Docomo Inc (ADR) (NYSE: DCM) refused to sell their older surplus smartphones to third party retailers.

Although Apple and its iPhone devices were not specifically mentioned in the report, "two senior government sources" told Reuters that the report indeed refers to Apple's business practices in the country.

Specifically, older model iPhone devices that haven't been sold in Japan are being kept out of the market and allocated towards overseas markets, such as Hong Kong, for sale there.

'Unfair Advantage'

Reuters' sources added that the Japanese mobile carriers bulk purchase Apple's smartphones and sell them at a discount, which gives the company an unfair advantage over rivals, including SAMSUNG ELECTRONIC KRW5000 (OTC: SSNLF).

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For instance, the iPhone 7 and Samsung's Galaxy S7 Edge both sell for 93,960 yen ($932) under Docomo's main service package. However, consumers who opt for a two-year contract can buy the iPhone for 38,232 yen but the price of the Galaxy phone is more expensive at 54,432 yen.

"The actions of the three operators alone do not account for the state of the market," Reuters quoted one of the government officials as saying. "We are getting closer to taking action."

The FTC did not state what penalties would be imposed on Apple or any other company found guilty of antitrust violations. However, Japan is a major market for Apple as it accounts for nearly one in every two smartphones sold in the country — the largest share in any major market.

Shares of Apple were trading lower by 0.15 percent at $114.45 early Friday morning.

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