Italy - Vendors Warranty: Antitrust Fines Apple Group 900 Thousand Euros

Commitments presented by Comet SpA accepted and made binding.

Fines totaling 900 thousand euros imposed on the Apple group responsible for unfair commercial practices to the detriment of consumers. This was the Antitrust ruling at the conclusion of an investigation that demonstrated how the Apple group operating in Italy was not fully applying the statutory two-year vendors warranty for consumers and how the information being provided on Apple's pay-based supplemental services was unclear.

More specifically, according to the reconstruction by Antitrust officials and in light of the numerous complaints received from consumers and various associations, the three firms in the group - Apple Sales International, Apple Italia S.r.l. and Apple Retail Italia - were implementing two distinct unfair commercial practices:

1. at the time of purchase or service request at its own sales points and/or through the apple.com and store.apple.com websites, consumers were not being provided with sufficient information about their free two-year service rights as provided for in the Consumer Code, thus obstructing the exercise of such rights and limiting them to the conventional one-year manufacturers’ warranty;
2. the information provided on the nature, substance and duration of the supplementary pay-based AppleCare Protection Plan coupled with the lack of clarity about the existence of the two-year statutory warranty induced consumers to sign an additional contract whenever the 'coverage' of the pay-based service overlapped with the free statutory warranty provided for in the Consumer Code.

Fines totaling 400 thousand were imposed for the first practice and 500 thousand for the second practice. During the course of the proceedings, the group's member companies made various changes to ensure greater transparency for consumers. The Authority accounted for these measures within the context of the first practice by lowering the maximum 500 thousand euro penalty, which was still applied in full to the second
practice.

The sums were divided among the three companies as a function of revenue, as follows:

1. Lack of information and failure to acknowledge the statutory warranty:

• Apple Sales International 240 (two hundred forty) thousand euros;
• Apple Italia S.r.l. 80 (eighty) thousand euros;
• Apple retail Italia S.r.l. 80 (eighty) thousand euros;

2. misleading information that induced the signing of additional pay-based
service contracts:

• Apple Sales International 300 (three hundred) thousand euros;
• Apple Italia S.r.l. 100 (one hundred) thousand euros;
• Apple retail Italia S.r.l. 100 (one hundred) thousand euros;

In addition to ceasing these practices and informing the Authority of the measures being taken to comply, the companies are also being required to notify consumers by publishing an excerpt from the Antitrust resolution on the www.apple.com website.

Last of all, the Apple Sales International company is being allowed 90 days to bring the sales packaging of the AppleCare Protection Plan into
compliance by indicating the existence and two-year duration of the statutory warranty for product conformity and the proper duration of the service period in relation to the statutory warranty's expiration.

The Antitrust Authority also decided, in the end, to accept and make binding the commitments presented by Comet, which was subject to the same inquiry. Comet is the owner of a chain of stores and a website dedicated to the sales of computer products. The commitments in question ensure that the company, both on its website and at its sales points, provides its consumers with full and detailed information about the two-year warranty for product conformity. The outcomes of the proceedings also revealed how Comet had already begun providing correct information to consumers in a suitable manner prior to the initiation of the proceedings.

Rome, 27th December 2011