iDon’tCompete: Apple caught by France’s competition authority (again)

April 15, 2020

2 min read

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What's going on here?

Apple received a fine of €1.1bn in March for conspiring in anti-competitive arrangements with two wholesalers of Apple products in France.

What does this mean?

Back in 2018, tech giant, Apple was the first public company to hit the $1 trillion valuation. In March 2020, it broke another record, but this time for the biggest penalty imposed on a single company by France’s competition authority Autorité de la Concurrence. The record fine came after it transpired that between 2005 and 2017, Apple and two French wholesalers, Tech Data and Ingram Micro, had agreed not to compete. Apple distributed more stock for new products to such wholesalers, leaving other competitors with insufficient stock to sell. The arrangement created levelled prices for Apple products on the market including iPads and Apple Mac computers and effectively allowed Apple to keep prices high since other competitors struggled to sell for less with limited stock.

What's the big picture effect?

The EU has developed stringent rules on data protection, hate speech, taxation and competition issues, putting Apple and the likes of America’s “Big Tech” companies under more scrutiny than ever. In February this year, Apple was fined €25m by France’s competition and fraud watchdog for failing to disclose to its customers that it was deliberately slowing down its older iPhone models. Last year, France also gave out a fine of €150m to Google on the ground that it lacked transparent advertising rules on its online search platform. Just a month prior to the announcement of Apple’s fine, Google started its appeal at the EU’s General Court against a €2.4bn fine imposed by the EU in 2017 for allegedly excluding search results of smaller rivals to promote its own shopping services.

Whilst the EU has the power to seek civil fines against companies for anti-competitive conduct, the US federal antitrust laws don’t currently provide for civil penalties. This explains why we might not yet see similar fines imposed by the US on these major tech companies for abuse of their dominant market position. 

Earlier this year, France announced a 3% tax on large technology companies such as Google, Apple, Facebook and Amazon. These tech companies usually use a tax loophole to have profits taxed through a country with lower tax rates, without paying a tax in the country where the money was made (the Frances of the world). This tax was aimed at recovering some of this lost revenue. In response to this, the US had threatened to impose retaliatory tariffs on $2.4bn (£1.8bn) of French goods, including champagne and cheese. France has since agreed to delay the tax until the end of 2020 as a result of such political tension.

It is easy to see that global tech companies wield enormous power, both economically and politically. These moves from European governments are their latest accelerating efforts to prevent and limit abuse of power by these tech companies. However, with such companies receiving the support of the US government, at least outside of its own borders, it will be interesting to see whether these measures can really put the tech companies in their place.

Report written by Long Dinh

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