France’s competition authority, Autorité de la concurrence has fined Apple a record €1,1 billion ($1.23 billion) for price-fixing.
At the heart of the issue is Apple’s practice of requiring distributors to sell Apple’s products for the same price as Apple itself, giving little room for companies to offer promotions or specials. One of Apple’s premier French resellers, eBizcuss, eventually shut down its operations in France, citing unfair competition.
According to the Autorité de la concurrence report, “after receiving a complaint in 2012 from eBizcuss, a distributor of specialised high-end Apple products (Apple Premium Reseller, APR), the Autorité de la concurrence fined Apple €1,1 billion, as well as wholesalers Tech Data and Ingram Micro €76,1 million and €62,9 million respectively.”
Tech Data and Ingram Micro’s fines were a result of their participation in Apple’s price-fixing efforts.
The agency offered a detailed explanation for its actions: “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 safely carry out promotions or lower prices, which led to an alignment of retail prices between Apple’s integrated distributors and independent Premium distributors. Finally, Apple has abused the economic dependence of these Premium distributors on it, by subjecting them to unfair and unfavorable commercial conditions compared to its network of integrated distributors. Given the strong impact of these practices on competition in the distribution of Apple products via Apple premium resellers, the Autorité has imposed the highest penalty ever pronounced in a case (€1.24 billion).”
France’s decision could ultimately have profound impacts on how Apple—as well as other companies—sells products, and crack open the door to more varied pricing.