A French judge has imposed a record fine of 1.1 billion euros on Apple, which would have disadvantaged independent distributors with price-fixing and exclusion.
Price fixing and preferential treatment
Apple and its wholesalers in France made illegal agreements, the French competition watchdog stated: the iPhone manufacturer and its wholesale partners agreed not to compete with each other and would also have prevented other distributors from competing with each other.
They did so by fixing prices: except for the iPhone, fixed prices were imposed on Apple products for about half of the French retail market. This pricing strategy made it difficult for other distributors to compete with even lower prices.
The market was “sterilised”
Apple would also have allocated both stock and clients to the two wholesale partners so that independent resellers would no longer have a chance. For example, when launching new products, they were given more stock, while other distributors were struggling with stock shortages.
In this way, they have ‘sterilised’ the wholesale market, the Financial Times quotes the competition watchdog: “The practices weakened certain companies, and in some cases — such as with eBizcuss — contributed to their exit from the market”, according to the competition authority.
Second fine in two months
France therefore imposed a fine of no less than 1.1 billion euros on Apple. It is the highest penalty payment ever imposed on a single company by the French competition authority and fits in with Europe’s increasing control over American technology giants. Barely two months ago, France fined Apple 25 million euros because new software updates deliberately slowed down older iPhone models.
According to the French regulator, the abuses occurred between 2005 and 2017, but came to light for the first time following a complaint in 2012 from the independent distributor eBizcuss. The two wholesalers involved were also fined: Tech Data was sentenced to a fine of 76 million euros and Ingram Micro to a fine of 63 million euros.
In addition to its own sales channels, Apple has 2,000 independent distributors in France. The company reacted immediately that it strongly disagreed with the ruling and that it is appealing.