The Tokyo Metropolitan Police Department arrested 4 merchants including a company president on the 23rd for selling Vodafone handsets with the SIM lock removed, citing trademark infringement and the Unfair Competition Prevention Law. The offending parties illegally modified the "U-SIM" card software of the handsets, thereby removing what is referred to as a "SIM lock." SIM locks are to prevent handsets from operating with the SIM cards of other providers.

Handsets were sold and delivered to customers using standard home delivery services. Vodafone's first quarter earnings report indicates that merchants receive 44,00 yen as an incentive for establishing new contracts for users, bringing the "true handset cost" for Vodafone to in-store cost + 44,00 yen. Vodafone, saying that this sort of activity "undermines [their] business model," estimates that damages range "in the millions" per month from this kind of activity.

Inspired by:
http://k-tai.impress.co.jp/cda/article/news_toppage/30723.html

Tokyo Metropolitan Police Department:
http://www.keishicho.metro.tokyo.jp/