Apple is facing a massive fine this week after France’s competition watchdog found the company to be demonstrating anti-competitive behavior.
As MacRumors reports, the watchdog fined Apple $1.23 billion, the highest penalty it has ever awarded, for both anti-competitive behavior within its distribution network, and an “abuse of economic dependence” on resellers in France.
The conclusion of the watchdog’s report made it clear why the fine had been awarded, stating, “Apple and its two wholesalers have agreed not to compete with each other and to prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products.” The two wholesalers in question are Tech Data and Ingram Micro, who have also been fined $70 million and $84.5 million respectively.
The investigation by France’s competition watchdog stems back as far as 2012 when premium reseller and French wholesaler eBizcuss accused Apple of abusing its position. The reseller ceased to operate in France after claiming “unfair competition.” With today’s result, it seems eBizcuss’ claims were valid.
As well as sterilizing the wholesale market, the watchdog found Apple’s behavior in France led to an “alignment of retail prices between Apple’s integrated distributors and independent Premium distributors.” In other words, prices were kept artificially high for consumers buying Apple’s products, although iPhones were not included within the investigation.
Such a large fine is unlikely to go unchallenged by Apple, especially as its profit margins are sure to be hit quite hard in the coming weeks due to the closure of all its stores outside of China.