Apple fined $1.2 billion by French antitrust watchdog

AppleInsider

France's competitive authority has fined Apple, and two of its local wholesalers, over practices regarding pricing which amounted to an antitrust violation.

The French government will reportedly fine Apple for alleged antitrust violations on Monday.

As expected, France's anticompetitive authority has now ruled against Apple in an antitrust violation. The fine, however, is a record-breaking 1.1 billion euros ($1.22 billion) for Apple itself, plus a total of 139 million euros ($154 million) for two of its suppliers.

"The French Competition Authority's decision is disheartening," an Apple spokesperson told AppleInsider. "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."

Apple has previously denied the French government's allegations, including in its latest annual report. In a section called "Contingencies," Apple noted legal issues that might lead to unknown fines, including this French Competition Authority. "The Company vigorously disagrees with the allegations," it said.

Apple and its wholesalers, Tech Data and Ingram Micro, were said to have created a cartel in which they all unlawfully agreed on prices, and worked against other competitors. Tech Data was fined 63 million euros ($70 million), and Ingram Micro was fined 76 million euros ($84.4 million).

"Apple and its two wholsalers have agreed not to compete with each other," said the French competition watchdog, "and to prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products."

This follows a recent, separate one, which saw the French government fine Apple $27 million over the 2017 battery patch that could slow down certain iPhones.

CloudTalkin

Price fixing?  That's kind of out of left field imo.  I thought they were concentrating on the App Store.  

rcfa

Bravo, as BS as the battery lawsuit is, as appropriate is this.

Any other products you can get heavily discounted, due to competition, but Apple manages to keep all distributors and retailers in line, best discounts are a few dollars off, or some “bundle deal”

sjworld

Not defending either side, but companies who engage in shady business should be punished based on their bottom line so they can feel the pain and think twice before playing the customers who feed them.

EsquireCats

rcfa said:

Bravo, as BS as the battery lawsuit is, as appropriate is this.

Any other products you can get heavily discounted, due to competition, but Apple manages to keep all distributors and retailers in line, best discounts are a few dollars off, or some “bundle deal”

That's one way to look at it, the other is that since people can buy other brands then it shouldn't make a difference if Apple products are a similar cost across the retail landscape, since it doesn't lessen competition for a product, a product that people continually claim is "no better", or even "worse" that the offerings from other brands.

So why do Apple do this? A few reasons: It lets Apple products be in more stores, as smaller stores aren't going to have a price disadvantage to large electronic chains or online retailers. The larger stores can afford to have slimmer margins or loss-leader promotions. The other reason is to not form retail gluts of consumers waiting for a promotion - this leads to sending stock back and forth to balance unnatural demand changes, and in the event that sales are held back by consumers waiting for a deal: more landfill and higher prices.

So who wins with this ruling? Well the French government do, at over a billion, the fine is an absurd cash grab that is out of proportion with the claimed damages (it's the sort of thing that will find French companies in the line of retaliatory action by the US-government, since everyone can play that game.)
Amazon is also a big winner, since they now have a seal of approval to price French competitors out of existence using their extreme buying power. Hooray?

The overarching idea that cheapest is always best has consequences. E.g. Look at the music industry, look at IAP, look at book sales.

seanismorris

What does Apple comment mean?

"The French Competition Authority's decision is disheartening," an Apple spokesperson told AppleInsider. "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."

Are they saying the price fixing scheme ended over a decade ago?  The price fixing at the retail level doesn’t seem to have changed.  

gatorguy

CloudTalkin said:

Price fixing?  That's kind of out of left field imo.  I thought they were concentrating on the App Store.  

I suspected it might not involve the App Store which is why I mentioned on Friday to wait until today to comment. Note that the entire discussion from Friday was wiped from the forum, I assume due to posters not playing together well? Not sure but maybe Mike will comment. 

georgie01

rcfa said:

Bravo, as BS as the battery lawsuit is, as appropriate is this.

Any other products you can get heavily discounted, due to competition, but Apple manages to keep all distributors and retailers in line, best discounts are a few dollars off, or some “bundle deal”

The issue isn’t that ‘heavily’ discounted new Apple products aren’t available. That’s not inherently unfair or illegal. The issue is whether Apple used illegal means to accomplish more-or-less consistent pricing.

Apple wants to maintain a public perception in part using price. Whether you agree with that or not is irrelevant. The price of a product affects the vast majority of people’s perception of that product. If all new Lamborghinis cost the same as a Ford Fiesta it wouldn’t have the same reputation even if everyone knew they were getting an amazing deal. Apple can use price perception to their advantage as long as they’re not breaking the law, and I’m not sure that the French Competition Authority has an indisputable case.

avon b7

EsquireCats said:

rcfa said:

Bravo, as BS as the battery lawsuit is, as appropriate is this.

Any other products you can get heavily discounted, due to competition, but Apple manages to keep all distributors and retailers in line, best discounts are a few dollars off, or some “bundle deal”

That's one way to look at it, the other is that since people can buy other brands then it shouldn't make a difference if Apple products are a similar cost across the retail landscape, since it doesn't lessen competition for a product, a product that people continually claim is "no better", or even "worse" that the offerings from other brands.

So why do Apple do this? A few reasons: It lets Apple products be in more stores, as smaller stores aren't going to have a price disadvantage to large electronic chains or online retailers. The larger stores can afford to have slimmer margins or loss-leader promotions. The other reason is to not form retail gluts of consumers waiting for a promotion - this leads to sending stock back and forth to balance unnatural demand changes, and in the event that sales are held back by consumers waiting for a deal: more landfill and higher prices.

So who wins with this ruling? Well the French government do, at over a billion, the fine is an absurd cash grab that is out of proportion with the claimed damages (it's the sort of thing that will find French companies in the line of retaliatory action by the US-government, since everyone can play that game.)
Amazon is also a big winner, since they now have a seal of approval to price French competitors out of existence using their extreme buying power. Hooray?

The overarching idea that cheapest is always best has consequences. E.g. Look at the music industry, look at IAP, look at book sales.

That seems to skirt the main accusation. Price agreements.

Price fixing (by whatever name) among companies should always be looked at and corrected.

acydtrip

Wow, the e education system is taking a beating in the forums. Price fixing is only a crime when applied to a monopoly. If there are only two cable tv providers in your city and they agree not to compete on prices. That is collusion. That is price fixing. 

What this is, is the normal authorized reseller distribution agreement.  

This is the equivalent of fining Burberry for selling the plaid  scarves for $275 at all licensed resellers. 

Burberry does not have a monopoly on scarves. Apple does not have a monopoly on laptops, desktops or smart phones. There’s plenty competition. No damage to the public. Absence of malice. Careful, Your nationalism is showing!!

CloudTalkin

EsquireCats said:

rcfa said:

Bravo, as BS as the battery lawsuit is, as appropriate is this.

Any other products you can get heavily discounted, due to competition, but Apple manages to keep all distributors and retailers in line, best discounts are a few dollars off, or some “bundle deal”

That's one way to look at it, the other is that since people can buy other brands then it shouldn't make a difference if Apple products are a similar cost across the retail landscape, since it doesn't lessen competition for a product, a product that people continually claim is "no better", or even "worse" that the offerings from other brands.

So why do Apple do this? A few reasons: It lets Apple products be in more stores, as smaller stores aren't going to have a price disadvantage to large electronic chains or online retailers. The larger stores can afford to have slimmer margins or loss-leader promotions. The other reason is to not form retail gluts of consumers waiting for a promotion - this leads to sending stock back and forth to balance unnatural demand changes, and in the event that sales are held back by consumers waiting for a deal: more landfill and higher prices.

So who wins with this ruling? Well the French government do, at over a billion, the fine is an absurd cash grab that is out of proportion with the claimed damages (it's the sort of thing that will find French companies in the line of retaliatory action by the US-government, since everyone can play that game.)
Amazon is also a big winner, since they now have a seal of approval to price French competitors out of existence using their extreme buying power. Hooray?

The overarching idea that cheapest is always best has consequences. E.g. Look at the music industry, look at IAP, look at book sales.

You've reached some odd conclusions.  If the accusations are true, there's no justification for price fixing.  The only reason for a company to do it is to maximize profits.  So if Apple did do it, they did it to maximize profit.  There's no altruism involved in that decision making process.  Smaller stores don't benefit.  Store stock goes back all the time because new products are constantly being introduced.  The idea of the US government doing something retaliatory is unrealistic.  Multinational "US" companies get fined all time.  Heck Apple has been fined in multiple countries... nary a peep from the gov't.  Amazon isn't a big winner at all.  Nothing about the French government's activities suggest they would allow a foreign company to put their local companies out business.  Everything about their activities says there's not a chance in hell they'd allow that to happen.

This isn't about the cheapest is always best.  That's a corner you painted yourself into on your own.    

avon b7

acydtrip said:

Wow, the e education system is taking a beating in the forums. Price fixing is only a crime when applied to a monopoly. If there are only two cable tv providers in your city and they agree not to compete on prices. That is collusion. That is price fixing. 

What this is, is the normal authorized reseller distribution agreement.  

This is the equivalent of fining Burberry for selling the plaid  scarves for $275 at all licensed resellers. 

Burberry does not have a monopoly on scarves. Apple does not have a monopoly on laptops, desktops or smart phones. There’s plenty competition. No damage to the public. Absence of malice. Careful, Your nationalism is showing!!

In the EU it is not necessary to have a monopoly to make price fixing a crime. Hundreds of companies have been fined and not had a monopoly position in the affected markets. Of course, the outcome of price fixing itself is normally a shared monopoly of the area covered.

I personally know the CEO of a company that was fined millions for simply attending a meeting where price agreements were mentioned. They had no idea the subject would be put on the table. The irony was that the company that reported the meeting was the same one that brought up the subject. The companies that report these activities are given protection from fines.

What is important is any attempt to curtail competition.

acydtrip

Arguing that the public has a right or is damaged by not having inexpensive MacBooks and iPhones is equivalent to demanding inexpensive Louis Vuitton handbags.. Who next? Ferrari, Bugatti? Why can’t they get a Bugatti for 45,000 euro? 

avon b7

acydtrip said:

Arguing that the public has a right or is damaged by not having inexpensive MacBooks and iPhones is equivalent to demanding inexpensive Louis Vuitton handbags.. Who next? Ferrari, Bugatti? Why can’t they get a Bugatti for 45,000 euro? 

That isn't the argument or the goal.

The goal is to stimulate competition.

If you begin fixing prices the consumer (or anybody else in the chain below the agreement) is in a lose, lose situation.

EsquireCats

CloudTalkin said:

EsquireCats said:

rcfa said:

Bravo, as BS as the battery lawsuit is, as appropriate is this.

Any other products you can get heavily discounted, due to competition, but Apple manages to keep all distributors and retailers in line, best discounts are a few dollars off, or some “bundle deal”

That's one way to look at it, the other is that since people can buy other brands then it shouldn't make a difference if Apple products are a similar cost across the retail landscape, since it doesn't lessen competition for a product, a product that people continually claim is "no better", or even "worse" that the offerings from other brands.

So why do Apple do this? A few reasons: It lets Apple products be in more stores, as smaller stores aren't going to have a price disadvantage to large electronic chains or online retailers. The larger stores can afford to have slimmer margins or loss-leader promotions. The other reason is to not form retail gluts of consumers waiting for a promotion - this leads to sending stock back and forth to balance unnatural demand changes, and in the event that sales are held back by consumers waiting for a deal: more landfill and higher prices.

So who wins with this ruling? Well the French government do, at over a billion, the fine is an absurd cash grab that is out of proportion with the claimed damages (it's the sort of thing that will find French companies in the line of retaliatory action by the US-government, since everyone can play that game.)
Amazon is also a big winner, since they now have a seal of approval to price French competitors out of existence using their extreme buying power. Hooray?

The overarching idea that cheapest is always best has consequences. E.g. Look at the music industry, look at IAP, look at book sales.

You've reached some odd conclusions.  If the accusations are true, there's no justification for price fixing.  The only reason for a company to do it is to maximize profits.  So if Apple did do it, they did it to maximize profit.  There's no altruism involved in that decision making process.  Smaller stores don't benefit.  Store stock goes back all the time because new products are constantly being introduced.  The idea of the US government doing something retaliatory is unrealistic.  Multinational "US" companies get fined all time.  Heck Apple has been fined in multiple countries... nary a peep from the gov't.  Amazon isn't a big winner at all.  Nothing about the French government's activities suggest they would allow a foreign company to put their local companies out business.  Everything about their activities says there's not a chance in hell they'd allow that to happen.

This isn't about the cheapest is always best.  That's a corner you painted yourself into on your own.    

We're talking about 2 wholesalers, invariably the pricing is going to be nearly identical across the board. This is a particularly unique accusation both because of how long the company has existed, but also because how unique it is in comparison to other markets. 
Your counter argument is non-sensical and tenuous at best. Especially your misunderstanding that Apple take back old stock up the wholesale chain.

CloudTalkin

EsquireCats said:

CloudTalkin said:

EsquireCats said:

rcfa said:

Bravo, as BS as the battery lawsuit is, as appropriate is this.

Any other products you can get heavily discounted, due to competition, but Apple manages to keep all distributors and retailers in line, best discounts are a few dollars off, or some “bundle deal”

That's one way to look at it, the other is that since people can buy other brands then it shouldn't make a difference if Apple products are a similar cost across the retail landscape, since it doesn't lessen competition for a product, a product that people continually claim is "no better", or even "worse" that the offerings from other brands.

So why do Apple do this? A few reasons: It lets Apple products be in more stores, as smaller stores aren't going to have a price disadvantage to large electronic chains or online retailers. The larger stores can afford to have slimmer margins or loss-leader promotions. The other reason is to not form retail gluts of consumers waiting for a promotion - this leads to sending stock back and forth to balance unnatural demand changes, and in the event that sales are held back by consumers waiting for a deal: more landfill and higher prices.

So who wins with this ruling? Well the French government do, at over a billion, the fine is an absurd cash grab that is out of proportion with the claimed damages (it's the sort of thing that will find French companies in the line of retaliatory action by the US-government, since everyone can play that game.)
Amazon is also a big winner, since they now have a seal of approval to price French competitors out of existence using their extreme buying power. Hooray?

The overarching idea that cheapest is always best has consequences. E.g. Look at the music industry, look at IAP, look at book sales.

You've reached some odd conclusions.  If the accusations are true, there's no justification for price fixing.  The only reason for a company to do it is to maximize profits.  So if Apple did do it, they did it to maximize profit.  There's no altruism involved in that decision making process.  Smaller stores don't benefit.  Store stock goes back all the time because new products are constantly being introduced.  The idea of the US government doing something retaliatory is unrealistic.  Multinational "US" companies get fined all time.  Heck Apple has been fined in multiple countries... nary a peep from the gov't.  Amazon isn't a big winner at all.  Nothing about the French government's activities suggest they would allow a foreign company to put their local companies out business.  Everything about their activities says there's not a chance in hell they'd allow that to happen.

This isn't about the cheapest is always best.  That's a corner you painted yourself into on your own.    

We're talking about 2 wholesalers, invariably the pricing is going to be nearly identical across the board. This is a particularly unique accusation both because of how long the company has existed, but also because how unique it is in comparison to other markets. 
Your counter argument is non-sensical and tenuous at best. Especially your misunderstanding that Apple take back old stock up the wholesale chain.

Whether we're talking about 2 or 20 wholesalers, the underlying price fixing is still the same.  It' benefits no one but the fixers.  Maybe I should have been clearer regarding inventory going back - I probably shouldn't have borrowed your term.  I should have said stock is drawn down all the time to adjust channel inventory levels.  Regardless, none of things in your original comment made any sense.  The reasoning, gov't retaliation, Amazon overrunning local competitors... there was no logic in any of it.

Rayz2016

acydtrip said:

Wow, the e education system is taking a beating in the forums. Price fixing is only a crime when applied to a monopoly.

This is not true. Price fixing is not tied to being a monopoly.

pulseimages

France, huh, good god 
What is it good for 
Absolutely nothing!

iSalmanPak

In the last few years Apple got busted for conspiring with book publishers to raise the prices consumers paid for e-books. And Apple was also caught colluding with other Silicon Valley firms to not hire each others employees thereby keeping downward pressure on salaries.

So not too surprising, really.

pacificfilm

iSalmanPak said:

In the last few years Apple got busted for conspiring with book publishers to raise the prices consumers paid for e-books. And Apple was also caught colluding with other Silicon Valley firms to not hire each others employees thereby keeping downward pressure on salaries.

So not too surprising, really.

If you're informed about corporate hiring, poaching happens all.the.time. It's  not about downward pressure but about holding on to key employees. My dad was in the headhunting biz for many man years and dealt with stealing and protecting corporations from losing top talent. it's rampant and, in his opinion, shouldn't be illegal. one can claim after any action that benefit a company, it pressures salaries or controls companies or their profits, blah blah blah, but it it's open season on poaching, too much corporate energy goes to setting up NDA's, dividing responsibility to share knowledge, always looking over their shoulder.

entropys

Apple and its two wholsalers have agreed not to compete with each other," said the French competition watchdog, "and to prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products."

Amazing. How dare they set a price for the product they make!  This is some truly Marxist thinking from a so called market regulator. From each according to his ability, at a price determined by mother france’s needs.

by this logic it would be OK if Apple ditched one or both of the wholesalers? What a stupid ruling.