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Japan’s antitrust watchdog agency may order corrective measures against carriers’ 4-year smartphone plans

Kyodo

The government’s antitrust watchdog will soon draw a conclusion that a four-year payment plan for smartphones offered by two major phone carriers is legally problematic, sources close to the matter said Friday.

The Japan Fair Trade Commission believes the payment plans offered by KDDI Corp. and SoftBank Group Corp. for the iPhone and other mobile devices may deprive customers of options to choose other carriers, a potential violation of the antitrust law, according to the sources.

Working together with the communications ministry, the commission is expected to request that phone carriers take corrective measures.

The watchdog is also expected to say the connection fees that major phone carriers charge to operators of low-cost wireless communication services in exchange for leasing network capacity are calculated vaguely and may “impede competition,” the sources said.

Under the plan, the carriers sell the iPhone or other devices to customers by splitting up the price across 48 months. But the remaining two years of the four-year term can become free of charge if they decide to switch devices and sign a new four-year payment plan with the same company.

If the customers decide not to switch devices and sign new contracts after two years, they are charged for the remaining two years, effectively discouraging them from changing carriers or terminating their current plans.

In a report, the watchdog plans to say that the payment plan “effectively deprives customers of their right to choose,” the sources said.

Critics have said the plans impede competition among phone carriers and lead to fees remaining high in the domestic market, which is dominated by KDDI, SoftBank and NTT Docomo Inc.

“The Japan Fair Trade Commission is currently compiling its report. It is set to be made public soon,” Teru Fukui, minister of consumer affairs, told a news conference Friday.

Communications minister Seiko Noda said in April that the ministry intends to instruct mobile phone carriers and their dealers to make sure customers are fully informed regarding the complex four-year payment plans.

As part of its probe into smartphone sales, the agency convened a meeting of experts in April whose views on the four-year payment program will be included in a forthcoming report.