Apple Inc. (NASDAQ:AAPL) is at the legal receiving end in Italy over a row relating to product warranties, and with the dispute in courts, Italian regulatory authorities are threatening to pull the plug on Apple’s retail operations in the country for about 30 days.
First, some background.
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According to Italian consumer protection law, an entity selling electronic items must do the following:
- Include a free two year warranty covering the product
- Inform the consumer of this warranty provided to him
Apple Inc. (NASDAQ:AAPL) has allegedly fallen foul of these laws by first, not giving customers information about the warranty, and worse, by providing the warranty under a separate ‘AppleCare’ package but at a cost.
According to a report, Apple’s actions invited a fine of 900,000 euros from the Italian authorities of which 400,000 euros were imposed for not offering the standard warranty, and another 500,000 euros for getting people to pay for the AppleCare service.
Apple appealed this fine, but the appeal was rejected by the courts in May. Apple is still to pony up the fines, and the delay, or say, refusal, has the competition authorities up in arms.
They are now resorting to stricter measures to force Apple to comply – reportedly, they may impose an additional fine of 300,000 euros, and far more serious, could even order Apple to shut down its stores and other operations in the country for 30 days.
AMCG, the Italian competition and market authority, is said to be miffed because of Apple’s “aggressive” move to offer its own warranty scheme – allegedly an unfair practice that could cost consumers for something supposed to be free under the law. Besides, the warranty by Apple and the standard warranty are different in one all-important respect: under the standard guarantee, Apple would have to replace the product if proved defective when just unpacked; under Apple’s warranty the firm is liable once the product is used and then found wanting. Further, in place of the flat two-year free warranty as required by law, AppleCare offers a free warranty for one year only, with an option to extend it by another two years at a cost.
The additional fine and temporary closure could become effective unless Apple responds within 30 days.
However, in a statement e-mailed to Reuters, Apple has made its position clear as follows:
“We have introduced a number of measures to address the Italian competition authority concerns and we disagree with their latest complaint.”