Sarit Mizrahi est étudiant dans le cadre du cours DRT 6929-O.

A newspaper article in the Wall Street Journal, dated February 15, 2011, discusses the possible qualification of Apple’s behaviour as anti-competitive, more specifically with regards to its new subscription service. Apple’s new subscription service essentially allows users to subscribe to magazine, newspaper, video and music services from various providers for the iPad, iTouch and iPhone products through their App Store. Apple has, however, dictated that this service must be offered to all users signing up through Apple under the same terms and conditions that the providers would offer users signing up through their own Websites. Additionally, Apple has decided to appropriate thirty percent of all subscription fees paid by customers so as to acquire these services from the App Store.

University of Wisconsin’s Law School Professor Shubha Ghosh states his suspicion of Apple’s new product, a suspicion which arises from two main questions : “Whether Apple owns enough of a dominant position in the market to keep competitors out, and whether it is exerting “anticompetitive pressures on price””. It is clear, by Apple’s blatant imposition of its thirty percent revenue sharing policy on all service providers, that it is exerting a certain level of pressure with regards to pricing. Whether or not this exertion of pressure can be considered anti-competitive, however, is strictly related to whether or not Apple can be considered as holding a dominant position in the market. Furthermore, deciding how dominant Apple’s position in the market is, depends entirely on how one defines the market in question. “Publishers, for example, might claim that Apple dominates the market for consumer tablet computers and that it has allegedly used that commanding position to restrict competition. Apple, in turn, might define the market to include all digital and print media, and counter that any publisher not happy with Apple’s terms is free to still reach its customers through many other print and digital outlets”. It all therefore comes down to the definition that the American Courts will give to describe the market in question.

From a Canadian perspective, it is possible that Apple’s practices may also potentially be considered as anti-competitive. However, as with the American position on the issue, there are still too many unknowns to be able to provide a firm statement on the matter. The Canadian position on anti-competitive acts is outlined in article 79 of the Competition Act. This article essentially provides that a practice is considered to be anti-competitive where : “(a) one or more persons substantially or completely control, throughout Canada or any area thereof, a class or species of business, (b) that person or those persons have engaged in or are engaging in a practice of anti-competitive acts, and (c) the practice has had, is having or is likely to have the effect of preventing or lessening competition substantially in a market [...]”.

It was determined in the case of The Director of Investigation and Research v. NutraSweet and Director of Investigation and Research v. Laidlaw Waste Systems Ltd. that a person can be considered to substantially or completely control a given market based on the extent of the territory upon which it offers its services, the effect of its practices with regards to prices, the number of competitors and their part in the market, and whether it is possible or not for new competitors to enter the market.

These various criteria emitted by the Competition Tribunal can be analyzed in light of Apple’s practices. To begin with, Apple has, since its venture into the world of digital media, slowly invaded various industries – first the music industry, with its iPod and iTunes store, then the movie industry, with its Video iPod and its offer of selling videos on iTunes, and now the newspaper and magazine industry with its iPad and new subscription policy. Considering the popularity of these products amongst consumers, it is safe to say that Apple has come to predominate in these various industries and has thus essentially entirely re-invented the various different forms of media available to consumers, making it so that these types of media can only be purchased from Apple and viewed only on Apple’s products. Furthermore, on top of attempting to eliminate the traditional forms of various products, such as music CD’s and print newspapers, Apple has unilaterally imposed prices upon service providers who must accept Apple’s terms in order to be permitted to enter Apple’s world. It is thus evident, by this imposition, that it significantly controls the prices related to all Apple products and the Apps purchased in their respect. Though there may be many other competitors that offer mp3 or mp4 players, and eventually others that will offer products similar to the iPad, Apple still holds a significant part of the market. This is arguably due to the visual appeal of its products and to the popular use of their easy-to-master software that can solely be used for Apple products. At this point, whether these competitors will survive this new market that Apple has tapped into remains to be seen, but regardless of this fact, based on the criteria emitted by the Canadian Competition Tribunal, it is safe to say that Apple is very close to dominating the areas of the market that it has ventured into.

The second criterion outlined in article 79 of the Competition Act requires the existence of an anti-competitive act, a non-exhaustive list of which can be found in article 78 of the Competition Act. Though the specific practices employed by Apple are not listed in this article, the numerous company practices outlined above can still potentially be considered as anti-competitive. The decision of whether or not these practices will ultimately be considered as such in light of the law, however, remains to be decided by the Competition Tribunal.

The last criterion outlined in article 79 of the Competition Act is aimed at determining the extent to which the practices in question have reduced competition on the market. This can largely be determined by analyzing the how difficult it is for another competitor to penetrate the market affected. The fact that the various media made available by Apple can only be provided on Apple products, however, essentially make it extremely hard to gain access to the market in question. Due to this, several of the different competitors who have attempted to best Apple throughout the years have not been successful. The attempts to overpower Apple, however, continue. It thus remains to be seen whether or not these new competitors will triumph over this prominent company, but considering Apple’s predominance in the market of digital media, I have my doubts.