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Phone networks moan to EU about brutal iPhone contracts

Apple has been accused of using overly harsh contracts by unnamed phone networks, who have reported it to the EU, according to a report.

Apple has been accused of strongarm tactics by unnamed phone networks who have reported the iPhone maker to the European Union's regulators, according to a report in the New York Times.

The terms of Apple's contracts with networks are so stringent, the report says, that a group of the aggrieved phone floggers have banded together in protest. They've begun talks with the European Commission's anti-monopoly regulators, which may result in the EC launching a formal investigation of Apple.

The core of the beef, to mix food metaphors, is that networks have to commit to selling a huge number of iPhones if they want to sell it at all. If they don't sell enough, they have to pay for the ones left over. This means they have to spend much of their advertising budget on Apple's blower, to the exclusion of others.

The smaller the company, and therefore the smaller the number of handsets, the more stringent the terms. Is this unfair, or even illegal? That's what the networks have asked the EC to find out -- and I should stress no anti-monopoly case has yet been opened, but the EC told the NYT it was "monitoring the situation".

Apple told the paper, "Our contracts fully comply with local laws wherever we do business, including the EU."

On the face of it, it seems to be Apple using the iPhone's massive popularity to its best advantage. The networks need it, because it gets people through the doors of their shops, even if those potential customers subsequently decide it's too expensive and they want a cheaper alternative. But not many people are going into phone shops and saying, "I'd like to take a look at your most reasonably priced Android phone, my good man."

Three, Vodafone, O2 and EE -- the UK's major networks -- all declined to comment on the story. There's no indication that any UK network has anything to do with the complaint to the EC, which is said to focus on French companies.

Apple settled an EC anti-monopoly suit in December, in which it and four major book publishers were accused of fixing the price of ebooks.

Have you found phone shops prioritise the iPhone in the UK, with sales staff suggesting it above other smart phones? If you work in a phone shop, is there pressure to push Apple's blower? Leave a comment below, or on our Facebook wall.

Update: Added everyone's "no comment" throughout the day.