Saturday, April 4, 2020

Apple fined 1.1 billion euros for anti-competitive practices

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The French Competition Authority has just ordered Apple to pay a record fine of 1.1 billion euros for “cartels in its distribution network” and “abuse of economic dependence on its independent resellers” .

“It is the heaviest sanction pronounced” by the Competition Authority. It considered that the computer giant “had committed an abuse of economic dependence” on its retailers, a practice considered to be particularly “serious”.

The authority was seized in 2012 by eBizcuss, a distributor of high-end specialized Apple products. “The Authority deciphered, during this case, the very specific practices that had been implemented by Apple for the distribution of its products in France (excluding Iphones), such as the iPad. “

“Price alignment”

First, Apple and its two wholesalers agreed not to compete and prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products.

Secondly, so-called Premium distributors could not risk promoting or lowering prices without risk, which led to “alignment of retail prices between Apple’s integrated distributors and independent Premium distributors”, explains the Authority by adding: “In view of the strong impact of these practices on competition in the distribution of Apple products via Apple premium resellers”, the Authority therefore imposed the highest penalty ever pronounced in a case of this type .

In this case Apple was sentenced to 1.1 billion euros and two wholesalers, Tech Data and Ingram Micro respectively for 76.1 million and 62.9 million euros for one of the practices of ‘agreement.

Three anti-competitive practices

The IT giant is accused of having implemented, in France, within its distribution network of electronic products (excluding iPhone), three anti-competitive practices. The first with a distribution of products and customers between its two wholesalers Tech Data and Ingram Micro.

According to the Authority, this system has in a way “sterilized” the wholesale market for Apple products, by freezing market shares and preventing competition between the various distribution channels of the Apple brand. Hence an alignment of the selling prices of Apple products on almost half of the retail market for Apple products.

The Authority also sanctioned Apple for strongly encouraging resellers to charge the same prices as those charged in Apple Stores.

In addition to the communication of prices, the control of promotions and the monitoring of prices, the elements on file show that Apple has developed “a skein of contractual clauses” and implemented a set of behaviors that left no margin for maneuver to resellers.

In addition, when launching new products, resellers often found themselves deprived of stocks so that they could not respond to orders made to them while the network of Apple Stores and “Retailers” were for their share regularly supplied.

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