Apple, Amazon hit with antitrust investigation in Spain over hardware sales deal

AppleInsider

Apple and Amazon are being investigated in tandem in Spain, for arrangements the pair have allegedly made to squeeze out third-party sellers of iPhones, iPads, and Macs in the country.

Spain's Comision Nacional De Los Mercados Y La Competencia (CNMC) announced on Friday morning that it was investigating if Apple and Amazon have unfairly colluded to "reduce competition in the Internet retail market for electronic products." Specifically, the group is looking for proof of any deals that the pair have made limiting sale of Apple products to Amazon itself.

Spain's CNMC goes beyond just sales of hardware. The inquiry also is investigating if the effort is strengthening Amazon's position in marketing services to third-party resellers.

As with most anti-trust investigations worldwide, there will not be a quick resolution. The CNMC has given itself 18 months to fully examine the matter, and determine a resolution. Appeals could potentially extend this much further as well.

Apple selling directly in Amazon in Spain began at the same time almost worldwide. The deal, which applied to the United States, United Kingdom, France, Germany, India, Italy, Japan, and Spain started in November 2018.

Prior to the deal, the products were either not available or only sold through the third-party marketplace. This process led to products being offered to Amazon customers at varying price points, and not necessarily in perfect condition.

In the US, terms of the Apple-Amazon agreement mean that resellers must either be authorized by Apple, or buy at least $2.5 million in refurbished inventory every 90 days. The latter must come directly from Apple or through a third party with over $5 billion in annual sales, typically meaning carriers and national retailers.

Third-party vendors not meeting those purchase thresholds were prevented from selling Apple products on the Amazon store in January 2019.

Even outside the Epic Games versus Apple trial, Apple is facing several other antitrust actions in the US, the UK, and elsewhere. However, those generally focus on Apple's App Store, versus its relationship with resellers like Amazon.

CNMC versus Apple and Amazon antitrust announcement by Mike Wuerthele on Scribd

(function() { var scribd = document.createElement("script"); scribd.type = "text/javascript"; scribd.async = true; scribd.src = "https://www.scribd.com/javascripts/embed_code/inject.js"; var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(scribd, s); })();

Keep up with everything Apple in the weekly AppleInsider Podcast -- and get a fast news update from AppleInsider Daily. Just say, "Hey, Siri," to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple's Podcasts app, or via Patreon if you prefer any other podcast player.

jungmark

I’m confused. Why can’t Apple choose who sells their products?

eriamjh

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

jungmark

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

Because it’s their products. Lots of companies do it. 

crowley

AppleInsider said:

Apple selling directly in Amazon in Spain began at the same time almost worldwide. 

Think this may need revision as I can't make any sense of it.

genovelle

crowley said:

AppleInsider said:

Apple selling directly in Amazon in Spain began at the same time almost worldwide. 

Think this may need revision as I can't make any sense of it.

They are saying that Apple started selling their products directly on the Amazon store in Spain at the same time they did worldwide. 

crowley

genovelle said:

crowley said:

AppleInsider said:

Apple selling directly in Amazon in Spain began at the same time almost worldwide. 

Think this may need revision as I can't make any sense of it.

They are saying that Apple started selling their products directly on the Amazon store in Spain at the same time they did worldwide. 

I can work it out from context, but nevertheless it's a very garbled sentence.

genovelle

I believe the reason they started this program was to weed out the counterfeit products that were out of control on Amazon. This immediately solved that problem. 

Amazon is Walmart online and I cannot sell Apple products at Walmart 

davidw

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

I'm confuse on why you don't think the maker of a product have no say in who and where their product is sold. If you made a product, you have every right to only sell that product at Walmart. Target would have no say in the matter and can not demand that you also allow them to sell your product in their stores. 

The question Spain is asking is whether Apple and Amazon "colluded" to place such high restrictions on who can be a reseller of Apple products in the Amazon Marketplace, that it limits the competition for Amazon (on selling Apple products) in the internet retail market, (in Spain at least). Remember, Amazon themselves, is a third party online authorized reseller of Apple products. And Amazon competes with other Apple resellers in the Amazon Marketplace. Plus Amazon practically owns online retail sales.

This has nothing to do with Apple being able to place restrictions on the resellers of their products. Which every product maker have the right to do. So long as it does not violate any discrimination laws.   

gatorguy

davidw said:

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

I'm confuse on why you don't think the maker of a product have no say in who and where their product is sold. If you made a product, you have every right to only sell that product at Walmart. Target would have no say in the matter and can not demand that you also allow them to sell your product in their stores. 

The question Spain is asking is whether Apple and Amazon "colluded" to place such high restrictions on who can be a reseller of Apple products in the Amazon Marketplace, that it limits the competition for Amazon (on selling Apple products) in the internet retail market, (in Spain at least). Remember, Amazon themselves, is a third party online authorized reseller of Apple products. And Amazon competes with other Apple resellers in the Amazon Marketplace. Plus Amazon practically owns online retail sales.

This has nothing to do with Apple being able to place restrictions on the resellers of their products. Which every product maker have the right to do. So long as it does not violate any discrimination laws.   

Yes that's what the concern is. The requirements to qualify as an Appel gear reseller on Amazon are excessive and intended to re34strict competition IMO. No idea if course will agree but I seem to recall this same issue being looked at in at least one other country. 

EDIT: Yes, the US was looking at it as well:

"The Federal Trade Commission appears to be interviewing resellers who have been impacted by the deal.

One seller, a Minnesota man named John Bumstead who specializes in refurbished MacBooks, was contacted earlier this month by a group of FTC officials. Bumstead told The Verge that he was interviewed by FTC lawyers and an economist about the impact of the Amazon-Apple deal on his business. The group did not disclose the broader purpose of the interview, but at least one member of the group is listed as belonging to the FTC’s newly formed Tech Task Force, a division launched in February to police anti-competitive behavior on tech platforms.

The FTC officials were curious about the role Amazon’s Marketplace played in Bumstead’s business and how much his business suffered from being kicked off.

One antitrust expert says the deal is likely illegal.

According to Sally Hubbard, an antitrust expert and the director of enforcement strategy at the OpenMarkets Institute, the practice of cutting a deal with a brand to shut out third-party sellers who may be peddling counterfeit products or simply just lower-cost versions is called “brand gating.” It’s rampant on Amazon, and it may be illegal, she argues.

“You put a gate around the brand and say all the third-party sellers of whatever that brand is get a notice saying you can no longer sell this product on our platform unless you get authorization from the brand,” Hubbard tells The Verge. “But of course the brand is not going to let you sell if you’re under the [minimum advertised price]. Problem is that it’s illegal under antitrust law” […]

It’s basically a price-fixing agreement between a dominant retailer and a brand. And that’s illegal under Section 1 of the Sherman Antitrust Act."

darkvader

jungmark said:

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

Because it’s their products. Lots of companies do it. 

Since this is about refurbs, no, it's not their products any more.  Apple sold the products once, someone else owns them now, and Apple doesn't have a right to interfere with that owner's sale of that owner's products.  That's restraint of trade and contractual interference, and depending on where you are it can be a tort, a crime, or both.

By pulling this stunt at Amazon, Apple has once again done something illegal to increase their profits.  Hopefully Spain smacks them down hard.

davidw

darkvader said:

jungmark said:

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

Because it’s their products. Lots of companies do it. 

Since this is about refurbs, no, it's not their products any more.  Apple sold the products once, someone else owns them now, and Apple doesn't have a right to interfere with that owner's sale of that owner's products.  That's restraint of trade and contractual interference, and depending on where you are it can be a tort, a crime, or both.

By pulling this stunt at Amazon, Apple has once again done something illegal to increase their profits.  Hopefully Spain smacks them down hard.

If you actually understood what this is about, you would know that it has nothing to do with the selling of "refurbished" products or the reselling of any Apple products. This has to do with what it takes to be able to be a reseller of any Apple products, (new, Apple Certified refurbished or Renewed) in the Amazon Marketplace. Amazon sets the rules, it's their marketplace. 

The question is whether Apple placed higher restrictions on qualifying to be an authorized Apple reseller, for sellers on the Amazon Marketplace, than elsewhere. Thus eliminating competition for Amazon, as an online Apple reseller. The purchasing of $2.5M worth of refurbished products from Apple or through a third party with over $5B in annual sale, is an Amazon restriction for being an Apple reseller in the Amazon MarketPlace, without having to be an authorized Apple reseller.  It has nothing to do with qualifying to be an authorized Apple reseller from Apple.

Notice that in order to be an Apple reseller in the Amazon MarketPlace, it's either be an authorized Apple reseller by Apple OR buy $2.5M worth of refurbished Apple products from Apple or through a third party with over $5B in annual sales. And guess which third party with over $5B in annual sales that most non-authorized Apple resellers on the Amazon MarketPlace are buying their refurbished Apple products though? If you guess Amazon, then you aren't as clueless as you seem.  

If you search for "refurbished Apple product" on Amazon, nearly every resellers are selling "Renewed" Apple products. "Renewed" is Amazon term for a refurbished product sold by Amazon and it comes with an Amazon warranty, not an Apple one. I would think one would need to be an authorized Apple reseller, in order to sell Apple Certified Refurbished products. But when an Amazon MarketPlace Apple reseller sells refurbished (Renewed) Apple products through Amazon, they are the middle man and make a profit on the difference they get the product for through Amazon and what they can sell it for in the Amazon MarketPlace.          

mknelson

darkvader said:
Since this is about refurbs, no, it's not their products any more.  Apple sold the products once, someone else owns them now, and Apple doesn't have a right to interfere with that owner's sale of that owner's products.  That's restraint of trade and contractual interference, and depending on where you are it can be a tort, a crime, or both.

By pulling this stunt at Amazon, Apple has once again done something illegal to increase their profits.  Hopefully Spain smacks them down hard.

People often confuse refurbished with used/preowned/trade in.

Apple has a refurbished section on their site - those are customer returns or defective units. They've been repaired/cleaned up/repackaged, warranty restored.

Used/preowned/trade ins don't go through that kind of process.

lkrupp

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

So if you created a company and were told you had to let a third party put your product one some shelf in the back of their store, and let their sales clerks disparage your product and guide customers to a competitor’s product, you would be okay with that? You know, of course, that that’s exactly what third party retailers like CompUSA and Best Buy did to Apple for years.

Your sarcastic attempt is stupid beyond belief.

crowley

lkrupp said:

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

So if you created a company and were told you had to let a third party put your product one some shelf in the back of their store, and let their sales clerks disparage your product and guide customers to a competitor’s product, you would be okay with that? You know, of course, that that’s exactly what third party retailers like CompUSA and Best Buy did to Apple for years.

Your sarcastic attempt is stupid beyond belief.

This is nothing like that.  This is Amazon agreeing to delist Amazon Marketplace sellers who offer Apple products, including used ones, in exchange for Amazon being able to sell Apple products at a price agreed with Apple on its store.  If true, this reeks of collusion, and if Amazon is the exclusive third party seller, of price fixing.

lkrupp

crowley said:

lkrupp said:

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

So if you created a company and were told you had to let a third party put your product one some shelf in the back of their store, and let their sales clerks disparage your product and guide customers to a competitor’s product, you would be okay with that? You know, of course, that that’s exactly what third party retailers like CompUSA and Best Buy did to Apple for years.

Your sarcastic attempt is stupid beyond belief.

This is nothing like that.  This is Amazon agreeing to delist Amazon Marketplace sellers who offer Apple products, including used ones, in exchange for Amazon being able to sell Apple products at a price agreed with Apple on its store.  If true, this reeks of collusion, and if Amazon is the exclusive third party seller, of price fixing.

Bullshit

genovelle

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

What product is not restricted? If you make something you get to decide where it is sold. You have the right to only sell it yourself or sell to resellers you trust with your brand. 

genovelle

crowley said:

lkrupp said:

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

So if you created a company and were told you had to let a third party put your product one some shelf in the back of their store, and let their sales clerks disparage your product and guide customers to a competitor’s product, you would be okay with that? You know, of course, that that’s exactly what third party retailers like CompUSA and Best Buy did to Apple for years.

Your sarcastic attempt is stupid beyond belief.

This is nothing like that.  This is Amazon agreeing to delist Amazon Marketplace sellers who offer Apple products, including used ones, in exchange for Amazon being able to sell Apple products at a price agreed with Apple on its store.  If true, this reeks of collusion, and if Amazon is the exclusive third party seller, of price fixing.

Correction. This is Amazon removing unauthorized 3rd party resellers that included questionable companies that were likely black market or counterfeit. In exchange Apple allows  a real store in the Amazon market that Amazon fulfills and maintains its brand identity. 

When you have a company the size of Amazon selling an item it becomes trusted as authentic even when it’s from a 3rd party. Any problems become Apple problems even in so called refurbished devices. 

crowley

lkrupp said:

crowley said:

lkrupp said:

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

So if you created a company and were told you had to let a third party put your product one some shelf in the back of their store, and let their sales clerks disparage your product and guide customers to a competitor’s product, you would be okay with that? You know, of course, that that’s exactly what third party retailers like CompUSA and Best Buy did to Apple for years.

Your sarcastic attempt is stupid beyond belief.

This is nothing like that.  This is Amazon agreeing to delist Amazon Marketplace sellers who offer Apple products, including used ones, in exchange for Amazon being able to sell Apple products at a price agreed with Apple on its store.  If true, this reeks of collusion, and if Amazon is the exclusive third party seller, of price fixing.

Bullshit

An excellent rebuttal, I'm convinced.

crowley

genovelle said:

crowley said:

lkrupp said:

eriamjh said:

I’m confused.  Why should Apple be allowed to restrict sellers or resellers of its products? 

So if you created a company and were told you had to let a third party put your product one some shelf in the back of their store, and let their sales clerks disparage your product and guide customers to a competitor’s product, you would be okay with that? You know, of course, that that’s exactly what third party retailers like CompUSA and Best Buy did to Apple for years.

Your sarcastic attempt is stupid beyond belief.

This is nothing like that.  This is Amazon agreeing to delist Amazon Marketplace sellers who offer Apple products, including used ones, in exchange for Amazon being able to sell Apple products at a price agreed with Apple on its store.  If true, this reeks of collusion, and if Amazon is the exclusive third party seller, of price fixing.

Correction. This is Amazon removing unauthorized 3rd party resellers that included questionable companies that were likely black market or counterfeit. In exchange Apple allows  a real store in the Amazon market that Amazon fulfills and maintains its brand identity. 

When you have a company the size of Amazon selling an item it becomes trusted as authentic even when it’s from a 3rd party. Any problems become Apple problems even in so called refurbished devices. 

That all may well be true.  However, it still may also amount to collusion and price fixing in the eyes of an antitrust regulator.