Apple started its trade-in program in August 2013, first in US, and then expanded it to UK, Germany and India. The program is expected to expand to other countries soon – soon being a relative term -, Asian Pacific countries and Latin American countries having priority in these projects. The name reveals the content of the program, but for the sake of clarity, it allows users to return their then old products (subject to limitations that are determined by Apple) and to get a discount on the new product based on certain criteria regarding their older product.
You might think it has nothing to do with law, but in fact, like many other things in modern world, it has everything to do with law, obviously with other factors having their shares in Apple’s strategy, like economics and marketing for which I claim to be only a little bit less than ignorant. I don’t rule Apple’s sincere environmental concerns out neither, for taking this step, but it is most likely that Apple started this program to more easily comply with SEC’s (US Securities and Exchange Commission) conflict minerals rules from 2012, among possibly some other reasons. Because the alignment of timings of SEC’s rule and Apple’s trade in program is too much to be pure coincidence.
This article is pure speculation, based on the objective data available on governmental websites, Apple’s website and other resources that internet offers. But it’s an educated guess.
US Legislator has adopted Dodd–Frank Wall Street Reform and Consumer Protection Act (commonly referred as Dodd-Frank Act) in 2010, mostly in response to late 2000s financial crisis, bringing drastic changes in financial regulations. But its effects are not contained in financial sector. This Act delegated to SEC the mandate for passing a rule that will regulate “conflict minerals”.
“Conflict minerals” refer to i) tantalum, ii) tungsten, iii) tin and iv) gold (also referred as 3GT), that are originated from Democratic Republic of Congo and 9 neighboring countries: Angola, Burundi, Central African Republic, Congo Republic, Rwanda, Sudan, Tanzania, Uganda and Zambia (also referred as “Covered Countries” in Dodd-Frank Act). Many NGOs have been active over years asking for regulations, since the revenue from these minerals were used to finance the regional conflicts which have been the cause of deaths of thousands. Since these minerals are used in in high tech electronic and aerospace industries, the revenue that is provided to the region is substantial.
SEC adopted its final rules in 2012, effective on January 1, 2013, expected to affect more than 6000 companies that are publicly listed in US, since there is no de minimis exception provided in the rules. Affected companies are expected to file their Special Disclosure reports and publish these reports on their publicly available websites. The initial cost of compliance, with required due diligence, is expected to be between US$3 billion and US$4 billion, with annual costs thereafter of between US$207 million and US$609 million. Regarding companies whose products contain conflict minerals, i.e. Apple and many other technology giants, one of the easiest way to be exempted from conducting this costly due diligence report is proving that they used recycled sources.
European Commission is expected to adopt a similar rule at the end of 2013 or at the beginning of 2014, that will affect European companies.
The regulations on conflict minerals might be seen as an attempt to reconcile humanitarian concerns with realities of modern world. And there is probably nothing wrong with it, as long as dictated business rules allow it.
In the meantime, good lawyers should keep an eye out for the fascinating interaction between developments around the world, the way societies react through legislation and the way corporate world deals with it through new business strategies.