On 17 December 2008, following a complaint from Bouygues Telecom in September 2008, the Competition Council, ordered Orange and Apple to suspend the five-year exclusivity agreement which allowed the mobile operator Orange to control the sales of iPhones in France. The Competition Council considered that the exclusivity granted by Apple to Orange would reduce competition (regarding prices, quality of the networks and service provider differentiation) and, to respond to such concerns, ordered interim measures aimed at allowing other mobile phone operators to begin distributing iPhones.
The Competition Council stressed that the mobile telephone market is characterised by weak competition owing to the small number of operators and high switching costs.
According to the Council, the exclusivity granted by Apple increases these switching costs i.e. the costs incurred by customers leaving their mobile network operator. The Council stressed that, in spite of the measures taken in favour of telephone number portability, it is still difficult for consumers to “switch” and that such an exclusivity granted by Apple to Orange would add another barrier.
Orange immediately announced that it intended to appeal the Competition Council’s decision.