Apple exempt from Corning’s EU antitrust probe deal

The European Commission has concluded an antitrust investigation into Corning’s glass supply deals. And for once, Apple just watched from the sidelines.

Apple not part of the relevant market

The European Commission has accepted a series of commitments from Corning, wrapping up an investigation over potentially anticompetitive practices involving the supply of its famous Gorilla Glass (officially called Alkali-aluminosilicate glass, or ‘Alkali-AS Glass’), used in the cover layer of smartphones, tablets, and wearables.

The EU’s preliminary findings had flagged that Corning may have abused its dominant position by locking OEMs and glass processing companies into exclusive or near-exclusive supply arrangements, unfairly shutting out competing glass manufacturers.

However, while Corning does supply Apple with specialty cover glass, the Commission found that those particular products fell outside the scope of the investigation, “as these have special compositions and are only used by Apple.”

For the rest of the relevant market, to address regulators’ concerns, Corning submitted a series of commitments in hopes of satisfying the EC and avoiding further action. And that’s what happened, after a little back and forth:

“In light of the outcome of this market test, Corning amended the initially proposed commitments and offered the following final commitments:

• To include in the scope of the commitments both Alkali-AS Glass and transparent glass ceramics (‘Clear Glass Ceramics’) used as cover glass in handheld electronic devices. Clear Glass Ceramics were included in the commitments because this cover material is likely to be used more extensively in the future by OEMs. But the commitments would not apply to Corning’s agreements with Apple given that the Commission found that the cover glass products developed by Corning for Apple are not part of the relevant market.
• To waive all exclusive dealing clauses in all its current agreements with OEMs and finishers, and to commit not to use such or similar clauses that have the same effect in future agreements.
• In the European Economic Area (EEA): When it comes to OEMs’ demand for Alkali-AS Glass and Clear Glass Ceramics covers for handheld electronic devices sold in the EEA, not to specifically require OEMs to purchase, or cause their supply chain to purchase, any quantity of Alkali-AS Glass or Clear Glass Ceramics from Corning and will not condition any price advantages on such sourcing requirements.
• Worldwide: Not to require OEMs to purchase, or cause their supply chain to purchase, more than 50% of their respective demand from Corning, as regards either (I) OEMs’ worldwide combined demand for Alkali-AS Glass and Clear Glass Ceramics covers for handheld electronic devices, and (ii) OEM’s worldwide demand for either of the segments of LAS Glass or Clear Glass Ceramics covers of handheld electronic devices. Without these separate caps, Corning could target the competitively sensitive LAS Glass and Clear Glass Ceramics segments with exclusive sourcing requirements, while still complying with the overall cap. In addition, Corning will not condition price advantages on such sourcing requirements.
• Not to require finishers to purchase from Corning more than 50% of their combined worldwide demand for Alkali-AS Glass (NAS Glass, LAS Glass), and Clear Glass Ceramics covers for handheld electronic devices, nor to condition price advantages on such purchasing requirements. In addition, Corning will not use any purchasing requirements targeting any segment (i.e. NAS Glass, LAS Glass or Clear Glass Ceramics) of this combined worldwide demand, nor condition price advantages on such purchasing requirements. This means that finishers are free to decide on how they comply with the overall cap in terms of the type and quantity of the different cover materials.
• When it comes to the enforcement (in court or via arbitration) of Corning’s patents related to break-resistant cover glass that are within the scope of the commitments, to base its claims only on patent infringement, and not on breach of contract. In addition, Corning will not use any other contractual mechanisms (e.g. penalties) to reinforce its patent claims.
• To include a standard anti-circumvention clause, the interpretation of which is further clarified in an interpretative note annexed to the commitments.
• To deliver a market communication to key stakeholders (OEMs and finishers) explaining the content of these commitments, in English and Chinese Mandarin.”

In essence, Corning will remove exclusivity clauses from its agreements with OEMs and finishers, won’t require minimum purchase commitments in the EU to unlock discounts, and won’t tie pricing to how much glass a customer buys globally.

Corning and the EU have agreed on a nine-year window for the commitments to remain in effect, during which time a trustee will monitor compliance. The company’s agreement with Apple, meanwhile, remains intact.

Via Bloomberg

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