iPhone: neither water nor AGCM “resistant”


On November 30, 2020 the Italian Competition and Markets Authority (Autorità Garante della Concorrenza e del Mercato, also known by the acronym “AGCM”) inflicted a 10 million Euro fine on the companies Apple Distribution International and Apple Italia s.r.l. (hereinafter "Apple") for spreading promotional messages via which they exalted the water resistance of different models of iPhone, whilst failing to specify that this property was true only under certain circumstances which do not correspond to the normal conditions of use experienced by consumers (so-called "misleading[1]" commercial practice).

In addition, these promotional messages were contradictory due to the presence of the following disclaimer: "The warranty does not cover damage caused by liquids”. In fact, in the after-sales phase Apple denied repairs of iPhones that were damaged as a result of exposure to water or other liquids, thus hindering the exercise of warranty rights protected by the Consumer Code (a so-called "aggressive"[2] commercial practice).


The present case allows us to focus attention on the consequences befalling the company that is subject to measures adopted by an authority (in this case, the AGCM).

Firstly, such a measure will have repercussions on the very complex relationship of trust that is established between a business and its consumers.

Indeed, it is well known that a trademark suggests to the consumer, in the very moment of purchase, that the product marked by that sign originates from a certain company.

A psychological and emotional relationship is formed between the consumer and the company which - by its very nature - is easily influenced by external circumstances.

It is precisely in this delicate context that the punitive measure of AGCM against Apple acquires relevance since it makes the basis of this relationship - namely trust and reliability - vulnerable.

It should not be forgotten that the basis of this relationship is inherently mnemonic, meaning that it relies on the (positive) memory that the consumer recalls and preserves with respect to a company, its products, and its services. The punitive measure of the authority precisely affects this memory because, among other things, it aims to warn the consumer of future commercial behaviours.

Indeed, it is easy to imagine how nowadays the news of this measure is spreading quickly through social networks, thus reaching a considerable portion of the company’s clients. On this point, one can understand the AGCM’s decision to force Apple to also publish the measure in the section of its website dedicated to the sale of iPhones, under the heading "Information for consumer protection".

This has greater impact on the company in comparison to an economic penalty, in so far as it damages its image and suggests that the consumer pay more attention when planning on purchasing products from the company affected by the punitive measure.

All of this translates into additional "invisible" costs for the company, i.e. costs that the company will have to bear in the following months in order to rebuild the relationship of trust/reliability with its customer (so-called "reconstructive advertising"). That is without forgetting the corrective activities (and related costs) that, following the warning received from the Authority, the fined company will have to put in place in relation to products already or soon due to be introduced in the market.

From a different point of view, the AGCM’s action also conveys a financial penalty.

In the case in question, the penalty that has been imposed, while constituting the maximum amount provided for by current legislation, nevertheless represents less than 5% of the total turnover achieved by the Apple group in the year 2019, amounting to approximately € 231.57 billion.

Therefore, it is legitimate to wonder if this penalty could have a real deterrent effect.

The answer is surely negative. However, attention should be given to the criterion of determination of the amount of the fine.

For example, if the alleged water resistance of the iPhone had been the only reason that brought the consumer to buy an Apple rather than a Samsung product, would a sanction of just 10 million Euros be appropriate?

Evidently not and, in fact, in that case the entire cost of an iPhone (about 1,000 Euros) would need to be taken into account and the penalty would need to be defined as a percentage of the turnover generated by the (unfair) sale occurred within the territory of the competent authority.

It follows that a predetermined criterion for the quantification of a penalty - such as that provided by the Consumer Code for unfair practices - is in itself insufficient to assess all the circumstances of the case and consequently to appropriately punish the commercially unsound conduct of a business.


The impression is that companies, especially those with dizzying sales, are underestimating the importance of maintaining greater transparency towards the market, perhaps in the mistaken belief that certain practices will go unnoticed. On the contrary, as we have just seen, such practices have negative consequences on the relationship with their customers. Moreover, in fields where competition is fierce, the risk of the client choosing a competitor is always around the corner.

However, punitive discipline may not be strict enough to have the desired deterrent effects. Of course, in the end it is the consumer who is at a disadvantage by not receiving adequate protection.

It is therefore reasonable to inquire whether there may be other punitive methods other than financial ones that can more adequately protect the consumer’s interests.

For example, consideration may given to the possibility of introducing different restrictive measures (which would have a more practical scope and be proportionate to the market-share held by the company) against businesses responsible for implementing unfair commercial practices.

[1] Unfair practices are defined as deceptive when they represent elements and/or features of a product that do not correspond to the truth.
[2] Unfair practices are defined as aggressive when they consist of harassment, coercion or other forms of undue psychological conditioning of consumers.