UPDATE 1-Canada court to order Apple to turn over records in iPhone probe

Wed Dec 17, 2014 12:57pm EST
 
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(Adds background, possibility of a court challenge)

By Randall Palmer

OTTAWA Dec 17 (Reuters) - The Federal Court of Canada agreed on Wednesday to order Apple Inc's Canadian subsidiary to turn over documents to the Competition Bureau to help investigate whether Apple unfairly used its market power to promote the sale of iPhones.

In seeking the order, the Competition Bureau said agreements Apple negotiated with wireless carriers may have cut into competition by encouraging the companies to maintain or boost the price of rival phones.

Federal Court Chief Justice Paul Crampton told the court he would sign the order later on Wednesday.

At issue is whether Apple misused the extraordinary bargaining power that the popularity of iPhone has given it in negotiating contracts with mobile carriers.

Under the order, Apple will have 90 days to turn over the documents, which include agreements it has reached with Canadian mobile carriers.

Competition Bureau lawyer Derek Leschinsky said Apple lawyers have suggested the company might launch a constitutional challenge of the right of Canadian courts to force Apple's wholly owned Canadian subsidiary to turn over records held by the California-based parent company.

He noted, however, that the provision of the Competition Act that gives Canadian courts the power to compel the production of documents held outside Canada has never been found to be unconstitutional.

Chief Justice Crampton said there is increasing legal consensus around the world that such provisions are legitimate.

The Competition Bureau said that among the items it is investigating is whether Apple Canada contracts may have discouraged wireless carriers from reducing the price of other companies' handsets, or whether Apple encouraged them to maintain or boost the price of wireless services for competing handsets. (Reporting by Randall Palmer; Editing by Meredith Mazzilli and Peter Galloway)