A Paris appeals court upheld a ruling cancelling Apple’s exclusiv...

of the LegalEDHEC Research Center at EDHEC Business School in Nice, France. The contract barred retailers chosen by Apple for the French market from selling the iPhone without Orange mobile services, he told us. They could sell “naked” iPhones free of phone providers, but their SIM cards would be locked onto Orange’s network, he said. That prevented rivals SFR and Bouygues Telecom from distributing the iPhone in their stores because they couldn’t offer Orange telecom services, he said. The deal also required Orange to buy iPhones from Apple, and allowed Orange to sell the devices to customers in other parts of the European Economic Space unless Apple had given itself or another retailer exclusive distribution rights there, he said. Dealers selected by Apple to sell iPhones in France could buy the devices only from Orange, he said. The agreement had vertical restrictions with negative effects for consumers, he said. The competition watchdog criticised the ban on cross- resales as well as the five-year exclusivity period, Roquilly said. The decision of the Paris Court of Appeal, which hears all challenges to Competition Commission orders, isn’t surprising given the hardcore restrictions in the contracts, especially those barring active and passive sales, he said. The court stressed that while Orange invested over 16 million euros ($20.6 million) in order to distribute and provide network services for 2G and 3G iPhones, it made a profit of 139 million euros, he said. The mobile operator’s risk was small because the Apple and iPhone brands are well known and because iPhone is so successful in the U.S., he said. Knowing its agreement with Apple was legally risky, “Orange probably planned this scenario” to turn a profit before competitors filed legal action, he said. Now it must figure out how to hang on to its competitive advantage knowing its rivals are going to sell the iPhone as well, he said. The competition watchdog’s decision isn’t bad for Apple because it allows more iPhones to be distributed by more partners, he said. Orange is taking its case to the Court of Cassation, the country’s highest tribunal, he added.