Spain hits Apple and Amazon with $218 million combined antitrust fine
Apple's consolidation of its third party iPhone, Mac, and iPad resellers to Amazon has induced Spain's antitrust agency to levy a $218 million fine in total on the pair.
Spain's Comision Nacional De Los Mercados Y La Competencia (CNMC) announced in July 2021 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 was looking for proof of any deals that the pair made limiting sale of Apple products to Amazon itself. Two years later, it appears to have found the proof it was looking for, and has fined the pair 194.1 million euros in total.
"We reject the suggestion made by CNMC that Amazon benefits from excluding sellers from its market place, as our business model hinges precisely on the success of the companies selling through Amazon," Amazon said in a statement to Reuters on Tuesday morning.
Both Apple and Amazon have stated that the deal benefits consumers, protects buyers from fake products, and increases the number and magnitude of discounts offered to customers.
Of the 194.1 million euro fine, Apple was hit with 143.6 million, and Amazon 50.5 million euro. Both companies have already said that they will appeal the matter, and they have two months to do so.
Apple selling directly in Amazon 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. It's not clear if the terms in Spain are the same.
Third-party vendors not meeting those purchase thresholds were prevented from selling Apple products on the Amazon store in January 2019.
In the United States, most of the Specialists in the country doing Apple resale have closed, with the rate accelerating in the last few years. The first wave started and continues with Apple's retail store expansion, and the Amazon deal was and is another nail in the coffin.
CNMC versus Apple and Amazon antitrust announcement by Mike Wuerthele on Scribd
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Comments
So to be part of the Apple market via Amazon in the U.S. a retailer must buy almost a million dollars in refurb Apple gear a month or work through a third party with $5 billion in annual sales. That would exclude a lot of mid-sized companies, much less smaller businesses. If that's not colluding with Amazon to keep down competition, then what is? And of course for Spain those numbers would be adjusted down for the market size.
There's no need to feel sympathy for Apple. The company is reaping what it sowed when it and a number of other Silicon Valley tech companies use thed Double Irish scheme to evade European taxes. Collectively as the EU and individually as countries, the Europeans are going to get that money back or at the very least make Apple's life hell. And it is very easy to suspect that whatever attitude the average European has toward EU regulations, they're delighted by these moves. The taxes that Apple, Adobe, Google and others did not pay are taxes they as Europeans had to pay. And don't forget that with most of Apple's well-paying jobs located in either Cupertino or Austin, Apple isn't putting much money back into Europe.
If you've wondered what the Double Irish is, here's a good explanation.
https://techcrunch.com/2013/10/28/the-double-irish-could-be-endangered-preventing-companies-like-google-and-twitter-from-shedding-tax-liabilities/?guccounter=1
Not sure why Apple keep reenacting their miserable corporate version of "Team America: World Police". A lot of US companies are great global actors. What is the benefit to Apple?
Apple have the right to attempt this, but I don't see how it's compatible with the wider legal landscape that places more value on stimulating competition to get a better customer experience than on recognising a single company's efforts to do so.