Apple has been fined by the Italian Competition Authority € 900,000 bacause of its warranty terms and the lack of information provided to consumers on its contractual guarantee.
As reported in a previous post, the Italian Competition Authority (AGCOM) - that is the entity in charge of disputes on unfair commercial practices and misleading advertising in Italy - had started an investigation on Apple's warranty policy.
As a consequence of such investigation the AGCOM held that:
- Apple's warranty terms making reference to a one year warranty did not adequately informed consumers of their statutory two years warranty prescribed by the Italian Consumers' Code implementing the EU Directive on the Sale of Consumers Goods and
- the information provided to consumers on the additional contractual guarantee (subject to the payment of further fees) together with the lack of information on the statutory two years warranty might mislead consumers that would be fostered to subscribe a guarantee whose scope was partially already covered by the statutory warranty.
Both conducts were deemed to trigger an unfair commercial conduct for the purposes of the EU Directive 2005/29/EC whose breach is punished with fines between € 5,000 and € 500,000. And therefore two separate breaches have been challenged to Apple and the sole reason why the second breach has been punished with only € 400,000 of fine is because Apple committed to adopt a policy to better inform consumers.
This decision is meant to become a ground breaking precedent in the sector as it shows the need for companies acting in the Italian market to localise their terms and conditions and to ensure the maximum level of transparency to consumers on their rights. Indeed the same principle applies not only to warranty terms but to any statutory consumers' right. Also since consumers' regulations are based on European Directives the issue is relevant across all the countries of the European Union. Companies should consider to review their terms and conditions in order to ensure their compliance with local consumers' laws bearing in mind that the fines for such breach are up to € 500,000.
It is likely that companies approaching the European market will become more cautious and prudent in reviewing the terms and conditions. This might be valid also with reference to software license agreements with consumers that quite rarely lead to disputes as to their limited value but can lead to considerable fines from the AGCOM.
Need more information on the above? Feel free to contact me, Giulio Coraggio.
