France’s anti-trust agency has fined Apple a record $1.23 billion over unfair sales practices. The authorities found the Cupertino-based company guilty for abusing its economic position to force retailers into signing contracts that limited competition and revoke their official right to determine prices of Apple products and services other than the iPhone.
Under the Apple Premium Reseller program, a chain of stores that exclusively sells Apple products, Apple required each distributor to charge a set price — a move that the watchdog believed sterilized the wholesale market. In addition, the French authorities found Apple reserved stocks in times of heavy demand for its own offline and online stores and restricted supplies to third-party retail partners.
France’s anti-trust law dictates that companies cannot be partial to their own sales channels and must treat distribution partners equally. It also states that retailers should be able to determine prices based on their position and goals. On top of that, the Apple Premium Reseller contract included exactly how many units of each product would be allocated to a retailer — another violation of France’s anti-competitive rules.
“During this case, the Authority deciphered the very specific practices that had been implemented by Apple for the distribution of its products in France (excluding iPhones), such as the iPad. Given the strong impact of these practices on competition in the distribution of Apple products via Apple premium resellers, the Authority imposes the highest penalty ever pronounced in a case (€1.24 billion). Finally, the Authority considered that, in the present case, Apple had committed an abuse of economic dependence on its premium retailers, a practice which the Authority considers to be particularly serious,” said Isabelle de Silva, President of the French Competition Authority, in a statement.
Along with Apple, two of its wholesale partners, Tech Data and Ingram Micro were also fined $84.7 million and $69 million respectively for partnering with Apple to practically operate a “cartel” within the APR distribution network and prevent other distributors to compete on price.
An Apple spokesperson called the decision “disheartening” and said it “relates to practices from over a decade ago and discards thirty years of legal precedent that all companies in France rely on with an order that will cause chaos for companies across all industries. We strongly disagree with them and plan to appeal,” in a statement to CNBC.
France’s decision is the result of years of investigation that first kicked off nearly 8 years ago when the country’s biggest Apple seller, eBizcuss collapsed and subsequently filed a lawsuit against Apple for holding back inventory after the retailer’s CEO publicly accused the company of anti-competitive behavior. Earlier this month, Apple also agreed to pay up to $500 million to settle a lawsuit over quietly throttling older iPhones in the United States.