Korean FTC May Investigate Apple/Samsung

freaktheclown writes "Samsung may have sold Apple flash memory chips at below-market prices, possibly violating the country's competition laws. From the article: 'According to a report by Yonhap News, Korean Fair Trade Commission (FTC) Chairman Kang Chul-kyu said that his agency could look into allegations that Samsung sold the memory chips to Apple at below-market rates. Apple reportedly grabbed a significant share of Samsung's flash capacity in order to introduce its new iPod Nano. Analysts also speculate the computer maker got a significant discount from Samsung in order to hit the Nano's $199 and $249 prices.'" Adds a new layer to a previous story, eh?

Comments

Pretty iffy

[Silvrmane]

The "article" on the blog this story points to is full of "may" "could have" "possibly" and other weasle-word disclaimers. Nothing to see here.

Re:Pretty iffy

[digitalunity]

Obviously, I haven't RTFA yet... but I hope the article summary is a typo. Wouldn't it make more sense for FTC regulators to get involved when someone sells something below production-cost instead of market value? I mean, selling for something cheaper than your competitor is part of being in a free market. I'd be more concerned if it was being sold at a loss because that is anti-competitive.

Bulk purchases?

[lightyear4]

Don't most - indeed, if not all - electronics suppliers give substantial volume discounts? I'd say buying up 40% of stock would qualify for a discount. IANAL, but I don't see why that is an issue.

Re:Bulk purchases?

[sam_paris]

Yeah it seems that apple is the only MP3 player manufacturer that is buying in such large quantities. Thus it makes sense that they should get the biggest discounts.

I get the feeling that this is simply due to all the other MP3 makers shouting "unfair" and putting pressure on the government to carry out this investigation. And this is basically due to sour grapes as every other company that makes MP3 players is wishing they were Apple or at least had as good products as Apple does.

Re:Not the First Anti-competiveness from Apple

[cthellis]

If Mac OS had become the dominant platform back in the day instead of Windows, you'd all be talking about Microsoft's superior engineering and decrying Apples anti-competetive tactics.

You got that right. ;-) But I wouldn't put too much behind a statement like "There's a reason Apple was the only one to put out a small/sleek player when everyone else was still putting out clunky nightmares"... The original iPods still looked, felt, and functioned much better than the competition, and after those 1.8" drives hit wider availability said competition STILL hadn't whipped up anything much that's par, let alone a few swings under.

Those talking about Apple's superior engineering and aesthetics still have quite the point. ;-)

Re:Not the First Anti-competiveness from Apple

[Forbman]

Dirty? About as dirty as any restaurant that only sells Coke or Pepsi products.

Apple got Hitachi to sole-source the HDs it used in the iPod. Big woop. Not necessarily dirty. Others had their chances at a slice of the 1.8" drive, too.

And Apple agreed to buy a big-ass load of NAND chips for the Nano to very favorable terms. Again, big woop.

If you are selling a commodity product, and someone comes along and says, "Hey, I'll buy all of your production for the next 18 months," and you still make money on it, you tend to bite on it.

Since we don't know what pricing level the KTC is looking into, it could be that Apple just committed to a magnitude larger memory buy than other buyers had done up until that point. Instead of selling several lots of 1 million SKUs, maybe, at varying price points over time, Apple says, "Hey, we'll buy 10 million SKUs over the next year at $5.00/10000 (when "the market price" tends to be $5.5/1000, or whatever) with half of the total up-front, and the rest delivered monthly upon delivery...", which is guaranteed money for Samsung (and pissing off AMD, Intel, Xylinx et al).

Again, not a big deal.

Want to buy a couple of animals from a farmer, but it'll take a week or two? OK. But if someone comes along and offers to buy everything he has for sale a couple of days after you talk to him, too bad!

"below market prices"

[YesIAmAScript]

Not below cost, "below market prices"?

If selling below market prices is illegal, how do market prices ever fall?

Re:Not the First Anti-competiveness from Apple

[Cyberllama]

First of all, I was incorrect. It was toshiba. It wasn't until hitachi started making 1.8 drives that someone was ABLE To compete with apple. My appologies for that mix up.

Second of all, my point isn't that this was some awful thing that Apple did. This is how business is played. It's not nice and friendly, its down and dirty, and Apple plays the same game as everyone else.

If Microsoft had used their clout to buy up all of Toshibas drive to make a slim mp3 player that took the market by storm, and companies like Apple were uanble to get any 1.8 drives to make players with your collective outrage would know no bounds. You would bitch and moan to no end that Microsoft was not playing fair. While I fully expected my original post to be unfairly moderated down (my karma can take the hit), it surprises me that so many of you could be so hypocritical.

I don't take issue, really, with how Apple condudcts itself, simply with the ultra-unrealistic impression that many of you seem to have about it. Apple is not some peace-loving commune where flower children lovingly hand-craft gadgets for your enjoyment. It's a business and it's run just like every other business.

Everytime they're accused of breaking the rules (as businesses will often do), there's a torrent of people anxious to rush to Apple's defense to tell us why it was "totally ok" for Apple to cheat. It's not ok for ANYONE, no matter how sexy their latest toy may be, to cheat wether it's Microsoft, Apple, or anyone else.