About a year after the first version of the iPhone was launched on the French market, and only 6 months after the release of the 3G version, Apple's distribution model for its blockbuster handset1 is being challenged by the French Competition Authority2. A week before Christmas 2008, the former Conseil de la Concurrence3 decided to suspend Apple's 5 years exclusive deal with France Telecom's Orange pending an "in-depth" investigation into the merits of the case. Orange's appeal against the Authority's decision did not change much as the Paris Court of Appeal upheld the Authority's decision granting interim measures4.
The suspension allows Orange's competitors to purchase iPhone devices from Apple and to sell them to their customers.
The French Competition regulator considered that the elements required in order to impose such interim measures were met: the exclusive deal was likely to further stifle competition in a sector that suffers from a competition deficit. The emergency was demonstrated by the fact that, due to the iPhone's growing success, the damage to the economy was irreversible. Hence, according to the Conseil and the Court, the suspension of Orange's exclusivity was necessary.
Nevertheless, the two decisions leave a mixed impression. The suspension of exclusivity seems to be justified, notably in view of its length and scope, but the Authority and the Court of Appeal put forward questionable arguments and sometimes seem to be contradicting themselves.