THE ASAHI SHIMBUN
August 7, 2019 at 14:55 JST
The Fair Trade Commission (FTC) is considering investigating Apple Inc. after Japanese suppliers complained they were forced to sign unfair unilateral contracts with the company, according to sources on Aug. 6.
Responding to an FTC survey, Japanese companies which have contracts to supply parts to Apple, said they had been strong-armed into signing one-sided contracts that stipulate that, “Apple can use technologies made by those Japanese companies in other businesses free of charge.”
Such practices by Apple might amount to “abuse of a dominant bargaining position” which is illegal under the Anti-Monopoly Law.
Last autumn, the FTC surveyed about 30,000 mainly small and midsize companies in Japan, to determine if large companies were unfairly siphoning off their intellectual assets.
According to sources, about 10 companies that produce electronic components for smartphones and other devices mentioned Apple, saying, “We are forced to sign one-sided contracts that could threaten our intellectual assets.”
Apple's controlling attitude toward its relationship with the Japanese companies became clear during negotiations, sources said. Apple insisted the Japanese companies agree to protect its trade secrets.
But Apple refused to offer them the same consideration and included wording in its contracts that it was entitled to use their technologies in other projects free of charge.
If their technologies are leaked to other companies through such contracts with Apple, the Japanese suppliers, despite being the originators, may wind up in price wars and lose buyers.
Several large companies were also among the parts suppliers that reported shady contract practices by Apple to the FTC.
Under the Anti-Monopoly Law, “abuse of a dominant bargaining position,” which puts subcontractors at a disadvantage, is prohibited. The FTC is considering looking into Apple’s practices to determine if it amounts to such a violation.
The Asahi Shimbun asked Apple Japan to comment but as of Aug. 6 had not received a reply.
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