Another legal tangle for Apple in Portugal? Just days after a consumer rights group in the country said it was preparing to bring legal action against Apple over the wording of its AppleCare warranty service, it has emerged that an IT reseller and distributor called Taboada & Barros is already suing Apple over claims of price fixing and unfair trade practices, asking for €40 million ($49 million) in damages.
According to a report in the Portuguese-language Apple blog iPhoneTuga – citing details first reported in the Portuguese weekly newspaper Sol – the suit stretches back to February but seems to have only been made public now, in light of the action being taken by the Portuguese Association for Consumer Protection (DECO). Unlike the DECO case — which has a precedent in Italy, where Apple was fined $1.2 million over a similar matter — this lawsuit is less cut and dry.
Taboada & Barros, which also controls a large Apple distributor called Interlog, alleges that Apple’s intentional restrictions on the quantity of products it distributes through third parties led to the failure of Interlog. And this has coincided with Apple getting more active in the country, it says:
“Apple arrived in Portugal in 2007 and the following year, usurped the distribution channels that were assembled by Interlog for over 20 years, taking over from our distributors.”
Apple has a dedicated site for Portugal but relies on resellers for physical sales.
A post on Portuguese business news site Economico, dating back to May 2011, underscores how demand has outstripped supply at resellers. With iPhone handsets, iPad tablets and other devices and peripherals not arriving after March (presumably due to Interlog failing), some claimed unfilled orders for devices like the iPad tablet.
A source at TB, speaking to Sol, says that on top of restricting the flow of products to third parties, Apple renegotiated the margins that resellers can take on products down to 4 percent from a previous 12 percent. “Apple unilaterally established products, prices and quantities to be sold to large retailers,” it said.
It’s likely that the margin reduction and lost sales over supply issues are both factors in the request for €40 million in damages.
Given that in other countries Apple has played a strong role on the retail side, with its own direct presence in the form of physical and online stores, if all this is accurate, it should be unsurprising to hear Apple cracking the whip and attempting to bring more of the sales effort in Portugal under its wing. Regardless, coming as it does alongside the DECO action, even raising the issue of unfair practices can end up being damaging to Apple’s reputation in the country.
We are contacting both TB and Apple for comment on this story and will update as we learn more.