On 16 March 2020, the French Competition Authority ("FCA") announced that it had fined Apple EUR1.1 billion, the highest fine ever imposed to an undertaking, for having implemented vertical agreements with certain of its distributors and an abuse of economic dependency against its independent premium resellers. It also fined Apple's two wholesalers, Tech Data and Ingram Micro EUR139 million.
In France, Apple sells its products either directly through its Apple Retail Stores and its website, or through a network of independent retailers who buy from two authorised wholesalers, Ingram Micro and Tech Data. Outside its own distribution network, Apple's products are distributed either by food and specialised retailers, or by smaller IT resellers including both "Apple Authorized Resellers" ("AAR"), which have a standard distribution agreement with Apple, and "Apple Premium Resellers" ("APR"), which access the Premium network by joining an optional program designed to provide a premium selling environment and experience.
Vertical restrictions
In its decision, the FCA sanctioned two vertical agreements. One between Apple and its two wholesalers, the other between Apple and its APR resellers.
- The FCA found that Apple had allocated the distribution of its products between its two wholesalers from March 2005 to March 2013, giving them instructions as regards the customers to which they should resell products and the exact quantities of products to be delivered. This practice had the effect of impeding competition between its two wholesalers, and restricting the commercial activity of the APR resellers by limiting their supplies – a strategy which eventually benefited Apple's own distribution network.
- The FCA also fined Apple for having fixed resale prices by giving APR resellers strong incentives to charge the same prices as those charged by Apple in its own network of Apple Stores. In the FCA's view, the behaviour of Apple led to an alignment of the retail prices covering almost half of the retail market for Apple's products.
Abuse of economic dependence
In its decision, the FCA also fined Apple for certain practices implemented regarding its APR resellers on the basis of a practice that is rarely sanctioned under French competition law - the prohibition for an abuse of economic dependency. The FCA considered that the following practices resulted in Apple weakening or even excluding certain resellers from the market:
- Given that the APRs were economically dependent on Apple because of strict contractual relationships, the FCA considered that Apple was imposing discriminatory delays or refusals to supply APR resellers, while at the same time Apple Stores or Apple's website were still supplied.
- Apple was also maintaining uncertainty regarding the terms of the discounts granted to APR resellers.
With this unprecedented sanction, far ahead the highest ever imposed on a single undertaking in France, there is no doubt that the FCA intended to send a strong message to large digital companies on how they treat smaller companies which form part of their supply chains and ecosystems.
With thanks to Hélène Fricaudet of Ashurst for her contribution.
