France has fined Apple €1.1bn fine for colluding with two wholesalers to stifle competition and keep prices high by handicapping independent resellers.
The penalty is the biggest ever imposed on a single company by France’s Autorité de la Concurrence, and comes as scrutiny of US tech giants is intensifying in Europe.
“Apple and its two wholesalers agreed not to compete with each other and to prevent distributors from competing with each other, thereby sterilising the wholesale market for Apple products,” the competition watchdog said.
The arrangement created aligned prices for Apple products such as iPads and personal computers for about half the French retail market. The iPhone was not included.
The abuses occurred between 2005 and 2017, according to the French regulator, but first came to light after a complaint by an independent reseller, eBizcuss, in 2012.
The two French wholesalers were also fined. One, called Tech Data, was asked to pay €76m and the other, Ingram Micro, €63m.
Apple was alleged to have allocated both stock and customers to the two wholesalers, and set prices for them which made it difficult for other resellers to sell for less.
When new products were launched, Apple favoured certain wholesalers by giving them more stock, while others found themselves without enough to satisfy customer demand. “This weakened certain companies, and in some cases, like that of reseller eBizcuss, contributed [to] them leaving the market,” the competition regulator said.
Apple relies on its own stores and website to sell products, as well as about 2,000 independent resellers in France, which buy stock from wholesalers or directly from Apple. “The resellers are independent businesses and must be allowed the freedom to determine their commercial strategy, such as what products to sell, how much and what supplier to choose,” the regulator said, adding that Apple had prevented them from doing so.
The example of eBizcuss showed the “concrete impact and effects of Apple’s abuse of its dominant position” when the reseller was unable to satisfy its customers’ demand for Apple products or compete on price. That led to a fall in revenue in Paris and Lyon of about 15 per cent, the regulator said.
The president of a trade association of resellers told the regulator that Apple had a strategy to weaken the resellers. One independent reseller, Alis Informatique, described it a “story of planned death”.
Apple said the decision was “disheartening”, that it “strongly disagreed” and that it would appeal. “It relates to practices from over a decade ago and discards 30 years of legal precedent that all companies in France rely on with an order that will cause chaos for companies across all industries,” it said in a statement.
The fine was the second that France has imposed on Apple in two months. In February, the Californian company was fined €25m after its software updates were found to have slowed down older iPhones.
The European Commission has imposed billions in fines on Apple, Google and Facebook in recent years over their tax arrangements and alleged abuse of dominant positions in everything from online advertising to mobile phone software.