Why This Matters:
This is the largest anti-competitive fine in history and, if Apple loses on appeal, could change how it does business in Europe and elsewhere.
Apple and a pair of its French wholesale partners face fines for operating, according to the French competition authority, as a cartel, agreeing not to compete with each other, setting prices, and potentially squeezing out the competition. Apple’s fine of $1.2 billion is the largest ever levied on a company for anti-competitive practices, according to a report in TechCrunch.
Good business or collusion: Apple sells its products in France through a variety of retail and wholesale partners, some of which get premium badges, which requires them to provide services and experiences prescribed by Apple. The French government has issues with this relationship. While Apple’s wholesale partners, Ingram Micro and Tech Data, were fined $62.9 million Euros and $76.1 million Euros, respectively, Apple’s fine is much larger because of the company’s size.
Is it really a cartel? In a statement obtained by TechCrunch, Isabelle de Silva, President of the French Competition Authority said “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.” Among the French Authorities charges is that Apple forced the premium partners to match integrated seller prices. These sale practices did not, by the way, extend to iPhone sales.
Apple doesn’t agree: “Apple has been operating in France for over 40 years and we are proud of our many contributions to job creation and economic development. Our investment and innovation supports over 240,000 jobs across the country. The French Competition Authority’s decision is disheartening,” an Apple spokesperson told TechCrunch.
What’s next: Apple will appeal. While it may not win the case, there’s always a chance that negotiation could lead to the French Authority reducing the fine in exchange for Apple changing some of its retail practices in the country.
Bottom line: The world’s appetite for stronger tech regulation and a recalibration of how tech companies operate around the world probably means that, while this fine may have been one of the biggest levied against a tech company, it’s far from the last.
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