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Retailers attack ‘unfair’ Apple South Korea practices

Apple South Korea is under fire from retailers, accused of using unfair commercial practices.

South Korean retailers have joined forces to confront Apple’s continuous “gapjil” — a uniquely Korean term referring to the abuse of power by someone against a person in a weaker position — that has put an increasing financial burden on their operations.

The Korea Mobile Distribution Association has claimed in a statement that Apple South Korea had habitually forced local dealers to buy the iPhone maker’s new models for demonstration or demo phones, as opposed to other brands’ practices, putting an increasing financial burden on them, and that “they cannot stand it anymore”.

The retailers say they had no choice but to accept Apple’s overbearing demands, since the popular iPhone’s position in the market makes it difficult to ignore, to say the least.

It is reported that the retailers had to buy Apple’s new models including the iPhone XS, iPhone XS Max and iPhone XR, but having to buy too many new models in a short period of time and the “exorbitant prices” of the new phones resulted in a significant financial burden.

According to the KMDA, most mobile phone manufacturers offer their new models for demonstration for free, and collect them when newer models are released. Apple, however, has imposed additional conditions regarding the brand’s new model promotion: forcing retailers to pay for the manufacturing cost of phone stands, and determining where the stands and promotional posters will be placed in stores, according to local retailers.

Domestic mobile carriers are no exception to Apple’s overbearing position. Industry watchers say local carriers had to shoulder advertising expenses aimed to promote Apple’s new lineup. Even the costs of subsidy plans and repair fees for Apple’s phones tend to be covered by mobile carriers.

The Fair Trade Commission ruled that Apple South Korea’s sales practices were in violation of local competition laws, and sent a review report to the iPhone maker that indicates the corresponding fines and required measures to address the company’s anticompetitive behavior. Apple has yet to respond.

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