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Apple fined $1.2B by French antitrust authorities

183 points by cj 7y ago

Mindwipe 7y ago
This is going to keep happening. The App Store has been poison to Apple and I've no idea why they didn't see it coming.
- sbuk 7y ago
  This has nothing to do with the App Store. It's about colluding to price-fix with their French wholesalers. FTA: > “Apple and its two wholesalers agreed not to compete and prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products”
  - hef19898 7y ago
    Classic anti-trust case. In cases like this I always wonder whether corps like Apple already priced the fines in or not. But than there is still the perosonal liability angle.
webmobdev 7y ago
This is good news. Wish we had more pro-active government actions like this to protect us consumers!
MichaelApproved 7y ago
$1.2B appropriate? It’s hard for me to tell in this case because I don’t know the size of the market they colluded to capture. Did Apple gain more than $1.2B in profits? Is this just a cost of doing business? There are so many cases when the fine is worth the expense, like advertising. I would much rather see a corporation be banned from a sector for a period of time when they get caught, in addition to a fine. Wells Fargo gets caught creating fake credit card accounts for customers? Wells Fargo can no longer sign up new credit card customers for 2 years. Equafax leaked everyone’s social security numbers? You are banned from accepting new customers for 3 years. The punishments I'm suggesting are off-the-cuff but some sort of corporate business practice penalty is more fitting than just a fine. It also gives the company time to correct the problem before they continue to do business in that sector.
- dmos62 7y ago
  Reminds me of when HSBC knowingly laundered money for drug dealers and terror organizations for years and was fined < 5% of its profits that year.
  - missedthecue 7y ago
    HSBC allegedly laundered 800 million (not revenue, not profit, but total amount allegedly laundered). They were fined 1.9 billion. People really need to stop with the 'cost of doing business' BS
    - TheOtherHobbes 7y ago
      'Ultimately, the prosecutor’s office came to believe the case was “the tip of the iceberg” in terms of suspicious transactions conducted through HSBC, according to documents reviewed by Reuters and reported earlier this year.' https://www.reuters.com/article/us-hsbc-probe/hsbc-to-pay-1-9-billion-u-s-fine-in-money-laundering-case-idUSBRE8BA05M20121211 https://www.reuters.com/article/us-hsbc-probe/hsbc-to-pay-1-...
      - nradov 7y ago
        Punishments are based on what can be proved in court, not what prosecutors believe.
        emiliobumachar 7y ago
        As it should be. But the "cost of doing business" theory can survive the fine being much bigger than the provable ill-gotten profits. It's just smaller then the overall ill-gotten profits.
        thu2111 7y ago
        In this case it actually wasn't though. The case was never tried. In the US the government can impose huge fines for AML violations directly, without ever having to prove their case. Combined with a culture of hyper-aggressive prosecutors and you don't really get justice in the traditional sense. Dig into the details and you'll see that HSBC's "crime" looks very different to how it's been publicly portrayed.
crazygringo 7y ago
In the past, I believe Apple has certainly placed limits on what prices Wal-Mart or Amazon could sell Apple products at, to avoid the appearance of them being "discounted" or customers shopping around -- your iPhone is $x99 no matter where you buy it, period. (They seem to have loosened up somewhat since.) Should that be illegal? For a company to say "I'll sell you this wholesale stock only on the condition you only resell it for exactly $x and never less." Is there a meaningful distinction here from supermarkets in an area colluding to sell all milk an inflated price? Or is it really the same anti-consumer, anti-competitive behavior in the end? And I wonder to what extent it has to do with defining the price on an entire category of items (milk) vs a single company (you can always buy an Android instead). I don't know the answer, so just curious if there's any kind of consensus conclusion here by economists.
- jeremymcanally 7y ago
  A single company setting a price for its own product, for which viable alternatives exist in the same category at different price points, is a very different animal than a group of suppliers using their monopoly status on a product category to inflate prices for their own profit.
  - AnthonyMouse 7y ago
    Except that it's exactly what allows that to happen. If MegaCorp says they sell widgets wholesale for $7 and you must sell them retail for $10, everybody sells them retail for $10 and makes $3. Meanwhile BigCorp does the same thing for for the widgets they make and all the widgets retail for $10. Nobody can lower their prices except the manufacturers who are few enough to be secretly colluding, so no price competition commences. Without this, BoxCo starts buying widgets for $7 and retailing them for $9. Which, immediately, is a lower price for the consumer. Then another shop without BoxCo's scale starts pressuring MegaCorp to give them widgets for $6.50 instead of $7 so they can compete with BoxCo's $9, which the manufacturer wants because they don't want BoxCo to have a retail monopoly on their goods. So now more retailers are selling for $9 retail to the benefit of the customer. Then BigCorp has to lower their wholesale prices so their retailers can compete with MegaCorp retailers selling for $9, and so on. Price fixing is enabled by fixing prices. Or to put it another way, enforced MSRP is a conspiracy to fix prices on the part of the retailers coordinated through the manufacturer.
codingslave 7y ago
Failing European economies where the workers look down on technical work will continue to look for ways to tax US corporations. Apple may have some monopolistic practices, but a larger problem in Europe is as I stated, a work force not inclined, interested, and put off by the "low status" of being a programmer. They will continue to pursue aggressive legal tactics to stop the domination of FAANG tech products, but the real answer is legislation and action that foster growth of tech companies and start ups.
- adventured 7y ago
  You're getting downvoted to oblivion for telling the truth, because that truth is painful and tastes horrible. The EU is going to unleash tens of billions in fines at US tech companies in the coming decade, because they can't compete and now they have a large hole in their budget thanks to the Brexit [1], which can conveniently be filled with fines. It's obvious what they're going to do. The only proper response is subtle economic war on the part of the US directed at France and Germany. And we will do exactly that. We'll use every practical lever we possess to harm their corporations in retribution. It's fair game. It's a mistake on the part of the EU, the US is radically stronger in every respect. If they're not careful, the EU will end up as an economic colony of China - perhaps appropriate given history. [1] https://www.reuters.com/article/us-eu-budget/eu-leaders-to-clash-over-money-as-brexit-blows-hole-in-budget-idUSKBN20D2V0 https://www.reuters.com/article/us-eu-budget/eu-leaders-to-c... "European Union leaders will clash this week over the EU’s 2021-2027 budget as Britain’s exit leaves a 75 billion euro ($81 billion) hole in the bloc’s finances just as it faces costly challenges such as becoming carbon neutral by 2050. "
  - Kuinox 7y ago
    I recommend you to stop reading only americans news/propaganda. Read a bit of everything, even it's propaganda. You'll discover what you considered as a news source is also propaganda.
    - taylodl 7y ago
      Are you suggesting Reuters is American news/propaganda? If so then I suggest you check this out: https://en.wikipedia.org/wiki/Reuters https://en.wikipedia.org/wiki/Reuters
throwGuardian 7y ago
France seem to be one of the few countries willing to openly challenge Apple's hegemony, be it planned obscelence, or colluding with distributors. Why isn't the EU enacting this at the continent level? And why is the US asleep at the wheel?
- DannyB2 7y ago
  In the US corporations buy, sell and trade lawmakers like kids once traded baseball cards.
bfieidhbrjr 7y ago
Gotta get that free money from somewhere, I guess.
KKKKkkkk1 7y ago
So I'm looking at the prices of Chanel No 5 eau de parfum 1.7 oz. Sephora $105.00 Macys $105.00 Nordstrom $105.00 Gee, what a coincidence.
- yohannparis 7y ago
  The fact that an USA company breaks the law in France doesn't mean that French companies do not break your local laws. Jurisdiction of commerce is where the buyer is, not the HQ location. Therefore your example is useless.
  - jldugger 7y ago
    Unless your point is that the pricing is actually varied in France, this antitrust decision reads like selective enforcement of market regulations -- protectionism.
    - mijamo 7y ago
      The price is actually varied in France and this decision has nothing to do with protectionism. Similar decision happened previously against French companies (ex: Michelin).
    - yohannparis 7y ago
      I disagree. A company cannot regulate prices in France, USA or French. A French company may regulate prices in the USA if the law allows it. The provenance of a company has nothing to do about the market regulation of the buyer country of residence. This is not a French ideology, this is a French law that is only applicable in France territory.
      - jldugger 7y ago
        > The provenance of a company has nothing to do about the market regulation of the buyer country of residence. I agree, it shouldn't. The question at hand is whether it does , despite this.
jariel 7y ago
The implied populism is disturbing. There are no facts presented, everyone is jumping on memes. The TC article [1] has considerably more information though still missing some fine points. The details of the charges are not going to benefit from transparency, as it doesn't look like some kind of solid case - it seems that Apple was engaged in some otherwise normal business practices. They required their resellers to sell at certain price points, and during times of short supply, they favoured some channels over others. This is not anti-competitive really, it's normal practice. If the French government applied such rules fairly and broadly there are probably any number of businesses that would be found to be committing such practices. The French have been outdone in so many areas, they're now engaged in a new form of a trade war, which is simply to grab surpluses of foreign companies as they can. And who, even among intelligent, literate people who are responsible enough to grasp material facts is going to care one bit? It's perfectly fine if France and the EU want to be more assertive in applying their legislation, but the rules have to be clear, they have to be applied impartially and universally, not in a punitive manner. Even better, France needs to produce exceptional companies that produce surpluses - much better to be in a situation where you have 'the great companies' and the risk is having someone DJ Trump screaming murder, as opposed to digging up dirt on otherwise well run companies in your own borders. Also - the EU's ridiculous taxation scheme, which allows Google and FB to declare most of their profits in Ireland and skip paying taxes in France is their problem, not the problem of foreign nationals who are just following the laws. The architect of said massive loopholes is none other than outgoing EU Commission Pres. JC Junker, so the hypocrisy there is nigh. [1] https://techcrunch.com/2020/03/16/apple-fined-record-1-2b-in-france-over-anti-competitive-sales-practices/ https://techcrunch.com/2020/03/16/apple-fined-record-1-2b-in...
- swisspol 7y ago
  > The French have been outdone in so many areas, they're now engaged in a new form of a trade war, which is simply to grab surpluses of foreign companies as they can. And who, even among intelligent, literate people who are responsible enough to grasp material facts is going to care one bit? When the US fines foreign banks, VW group and others for incredibly higher amounts of money, it's fair-game but when France fines a US company after an 8 years investigation, it's not, and the authorities don't even get the benefit of doubt that maybe they know what they are doing and have a solid case? You don't have any basis to make such a statement that this is only about some revenge. France was one of the top markets for Apple and had 20 years ago a vibrant network of small retailers dedicated to Apple hardware (without comparison with the distribution situation in the USA). That went downhill once Apple started its online store and then its physical stores. Maybe it's just survival of the fittest, or maybe Apple also tipped the balance in a way that's not ethical or maybe even not legal. That's why we have such government bodies as "Autorité de la Concurrence". > it seems that Apple was engaged in some otherwise normal business practices. The "Autorité de la Concurrence" probably has the best grasp compared to anyone on HN regarding what is "normal business practices" and what the law allows in France, which is not the USA. From TC article, the accusations are rather quite specific: ======================= The competition commissioner noted that Apple and its partners violated three specific areas: — Apple and the two wholesalers agreed not to compete with each other and also to prevent other distributors to compete on price, “thereby sterilizing the wholesale market for Apple products.” — Secondly, premium distributors were forced to keep prices high to keep them at the same level as those of integrated distributors. — Third, Apple has “abused the economic dependence” of these premium distributors, by subjecting them to unfair and unfavorable commercial conditions compared to its network of integrated distributors. (These last two points relate specifically to the accusations eBizcuss had lodged against the company.) ======================= It was a known fact at the time (10 years back or so) that independent Apple retailers were not getting stock from Apple for certain products and therefore couldn't meet demand from their customers. There were even some "hot" products that could only be bought from apple.com or its own physical stores. I don't know if some of these practices were illegal or not (that's why we have government bodies to act as arbiters and enforcers of the rules), but it certainly didn't help the retailers. There's some more details in https://www.lemonde.fr/economie/article/2020/03/16/concurrence-apple-ecope-d-une-amende-inedite-en-france-de-1-1-milliard-d-euros_6033256_3234.html https://www.lemonde.fr/economie/article/2020/03/16/concurren....

183 points by cj 7y ago

Mindwipe 7y ago

This is going to keep happening. The App Store has been poison to Apple and I've no idea why they didn't see it coming.

sbuk 7y ago
This has nothing to do with the App Store. It's about colluding to price-fix with their French wholesalers. FTA: > “Apple and its two wholesalers agreed not to compete and prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products”
- hef19898 7y ago
  Classic anti-trust case. In cases like this I always wonder whether corps like Apple already priced the fines in or not. But than there is still the perosonal liability angle.

webmobdev 7y ago

This is good news. Wish we had more pro-active government actions like this to protect us consumers!

MichaelApproved 7y ago

$1.2B appropriate? It’s hard for me to tell in this case because I don’t know the size of the market they colluded to capture. Did Apple gain more than $1.2B in profits? Is this just a cost of doing business? There are so many cases when the fine is worth the expense, like advertising. I would much rather see a corporation be banned from a sector for a period of time when they get caught, in addition to a fine. Wells Fargo gets caught creating fake credit card accounts for customers? Wells Fargo can no longer sign up new credit card customers for 2 years. Equafax leaked everyone’s social security numbers? You are banned from accepting new customers for 3 years. The punishments I'm suggesting are off-the-cuff but some sort of corporate business practice penalty is more fitting than just a fine. It also gives the company time to correct the problem before they continue to do business in that sector.

dmos62 7y ago
Reminds me of when HSBC knowingly laundered money for drug dealers and terror organizations for years and was fined < 5% of its profits that year.
- missedthecue 7y ago
  HSBC allegedly laundered 800 million (not revenue, not profit, but total amount allegedly laundered). They were fined 1.9 billion. People really need to stop with the 'cost of doing business' BS
  - TheOtherHobbes 7y ago
    'Ultimately, the prosecutor’s office came to believe the case was “the tip of the iceberg” in terms of suspicious transactions conducted through HSBC, according to documents reviewed by Reuters and reported earlier this year.' https://www.reuters.com/article/us-hsbc-probe/hsbc-to-pay-1-9-billion-u-s-fine-in-money-laundering-case-idUSBRE8BA05M20121211 https://www.reuters.com/article/us-hsbc-probe/hsbc-to-pay-1-...
    - nradov 7y ago
      Punishments are based on what can be proved in court, not what prosecutors believe.
      - emiliobumachar 7y ago
        As it should be. But the "cost of doing business" theory can survive the fine being much bigger than the provable ill-gotten profits. It's just smaller then the overall ill-gotten profits.
      - thu2111 7y ago
        In this case it actually wasn't though. The case was never tried. In the US the government can impose huge fines for AML violations directly, without ever having to prove their case. Combined with a culture of hyper-aggressive prosecutors and you don't really get justice in the traditional sense. Dig into the details and you'll see that HSBC's "crime" looks very different to how it's been publicly portrayed.

crazygringo 7y ago

In the past, I believe Apple has certainly placed limits on what prices Wal-Mart or Amazon could sell Apple products at, to avoid the appearance of them being "discounted" or customers shopping around -- your iPhone is $x99 no matter where you buy it, period. (They seem to have loosened up somewhat since.) Should that be illegal? For a company to say "I'll sell you this wholesale stock only on the condition you only resell it for exactly $x and never less." Is there a meaningful distinction here from supermarkets in an area colluding to sell all milk an inflated price? Or is it really the same anti-consumer, anti-competitive behavior in the end? And I wonder to what extent it has to do with defining the price on an entire category of items (milk) vs a single company (you can always buy an Android instead). I don't know the answer, so just curious if there's any kind of consensus conclusion here by economists.

jeremymcanally 7y ago
A single company setting a price for its own product, for which viable alternatives exist in the same category at different price points, is a very different animal than a group of suppliers using their monopoly status on a product category to inflate prices for their own profit.
- AnthonyMouse 7y ago
  Except that it's exactly what allows that to happen. If MegaCorp says they sell widgets wholesale for $7 and you must sell them retail for $10, everybody sells them retail for $10 and makes $3. Meanwhile BigCorp does the same thing for for the widgets they make and all the widgets retail for $10. Nobody can lower their prices except the manufacturers who are few enough to be secretly colluding, so no price competition commences. Without this, BoxCo starts buying widgets for $7 and retailing them for $9. Which, immediately, is a lower price for the consumer. Then another shop without BoxCo's scale starts pressuring MegaCorp to give them widgets for $6.50 instead of $7 so they can compete with BoxCo's $9, which the manufacturer wants because they don't want BoxCo to have a retail monopoly on their goods. So now more retailers are selling for $9 retail to the benefit of the customer. Then BigCorp has to lower their wholesale prices so their retailers can compete with MegaCorp retailers selling for $9, and so on. Price fixing is enabled by fixing prices. Or to put it another way, enforced MSRP is a conspiracy to fix prices on the part of the retailers coordinated through the manufacturer.

codingslave 7y ago

Failing European economies where the workers look down on technical work will continue to look for ways to tax US corporations. Apple may have some monopolistic practices, but a larger problem in Europe is as I stated, a work force not inclined, interested, and put off by the "low status" of being a programmer. They will continue to pursue aggressive legal tactics to stop the domination of FAANG tech products, but the real answer is legislation and action that foster growth of tech companies and start ups.

adventured 7y ago
You're getting downvoted to oblivion for telling the truth, because that truth is painful and tastes horrible. The EU is going to unleash tens of billions in fines at US tech companies in the coming decade, because they can't compete and now they have a large hole in their budget thanks to the Brexit [1], which can conveniently be filled with fines. It's obvious what they're going to do. The only proper response is subtle economic war on the part of the US directed at France and Germany. And we will do exactly that. We'll use every practical lever we possess to harm their corporations in retribution. It's fair game. It's a mistake on the part of the EU, the US is radically stronger in every respect. If they're not careful, the EU will end up as an economic colony of China - perhaps appropriate given history. [1] https://www.reuters.com/article/us-eu-budget/eu-leaders-to-clash-over-money-as-brexit-blows-hole-in-budget-idUSKBN20D2V0 https://www.reuters.com/article/us-eu-budget/eu-leaders-to-c... "European Union leaders will clash this week over the EU’s 2021-2027 budget as Britain’s exit leaves a 75 billion euro ($81 billion) hole in the bloc’s finances just as it faces costly challenges such as becoming carbon neutral by 2050. "
- Kuinox 7y ago
  I recommend you to stop reading only americans news/propaganda. Read a bit of everything, even it's propaganda. You'll discover what you considered as a news source is also propaganda.
  - taylodl 7y ago
    Are you suggesting Reuters is American news/propaganda? If so then I suggest you check this out: https://en.wikipedia.org/wiki/Reuters https://en.wikipedia.org/wiki/Reuters

throwGuardian 7y ago

France seem to be one of the few countries willing to openly challenge Apple's hegemony, be it planned obscelence, or colluding with distributors. Why isn't the EU enacting this at the continent level? And why is the US asleep at the wheel?

DannyB2 7y ago
In the US corporations buy, sell and trade lawmakers like kids once traded baseball cards.

bfieidhbrjr 7y ago

Gotta get that free money from somewhere, I guess.

KKKKkkkk1 7y ago

So I'm looking at the prices of Chanel No 5 eau de parfum 1.7 oz. Sephora $105.00 Macys $105.00 Nordstrom $105.00 Gee, what a coincidence.

yohannparis 7y ago
The fact that an USA company breaks the law in France doesn't mean that French companies do not break your local laws. Jurisdiction of commerce is where the buyer is, not the HQ location. Therefore your example is useless.
- jldugger 7y ago
  Unless your point is that the pricing is actually varied in France, this antitrust decision reads like selective enforcement of market regulations -- protectionism.
  - mijamo 7y ago
    The price is actually varied in France and this decision has nothing to do with protectionism. Similar decision happened previously against French companies (ex: Michelin).
  - yohannparis 7y ago
    I disagree. A company cannot regulate prices in France, USA or French. A French company may regulate prices in the USA if the law allows it. The provenance of a company has nothing to do about the market regulation of the buyer country of residence. This is not a French ideology, this is a French law that is only applicable in France territory.
    - jldugger 7y ago
      > The provenance of a company has nothing to do about the market regulation of the buyer country of residence. I agree, it shouldn't. The question at hand is whether it does , despite this.

jariel 7y ago

The implied populism is disturbing. There are no facts presented, everyone is jumping on memes. The TC article [1] has considerably more information though still missing some fine points. The details of the charges are not going to benefit from transparency, as it doesn't look like some kind of solid case - it seems that Apple was engaged in some otherwise normal business practices. They required their resellers to sell at certain price points, and during times of short supply, they favoured some channels over others. This is not anti-competitive really, it's normal practice. If the French government applied such rules fairly and broadly there are probably any number of businesses that would be found to be committing such practices. The French have been outdone in so many areas, they're now engaged in a new form of a trade war, which is simply to grab surpluses of foreign companies as they can. And who, even among intelligent, literate people who are responsible enough to grasp material facts is going to care one bit? It's perfectly fine if France and the EU want to be more assertive in applying their legislation, but the rules have to be clear, they have to be applied impartially and universally, not in a punitive manner. Even better, France needs to produce exceptional companies that produce surpluses - much better to be in a situation where you have 'the great companies' and the risk is having someone DJ Trump screaming murder, as opposed to digging up dirt on otherwise well run companies in your own borders. Also - the EU's ridiculous taxation scheme, which allows Google and FB to declare most of their profits in Ireland and skip paying taxes in France is their problem, not the problem of foreign nationals who are just following the laws. The architect of said massive loopholes is none other than outgoing EU Commission Pres. JC Junker, so the hypocrisy there is nigh. [1] https://techcrunch.com/2020/03/16/apple-fined-record-1-2b-in-france-over-anti-competitive-sales-practices/ https://techcrunch.com/2020/03/16/apple-fined-record-1-2b-in...

swisspol 7y ago
> The French have been outdone in so many areas, they're now engaged in a new form of a trade war, which is simply to grab surpluses of foreign companies as they can. And who, even among intelligent, literate people who are responsible enough to grasp material facts is going to care one bit? When the US fines foreign banks, VW group and others for incredibly higher amounts of money, it's fair-game but when France fines a US company after an 8 years investigation, it's not, and the authorities don't even get the benefit of doubt that maybe they know what they are doing and have a solid case? You don't have any basis to make such a statement that this is only about some revenge. France was one of the top markets for Apple and had 20 years ago a vibrant network of small retailers dedicated to Apple hardware (without comparison with the distribution situation in the USA). That went downhill once Apple started its online store and then its physical stores. Maybe it's just survival of the fittest, or maybe Apple also tipped the balance in a way that's not ethical or maybe even not legal. That's why we have such government bodies as "Autorité de la Concurrence". > it seems that Apple was engaged in some otherwise normal business practices. The "Autorité de la Concurrence" probably has the best grasp compared to anyone on HN regarding what is "normal business practices" and what the law allows in France, which is not the USA. From TC article, the accusations are rather quite specific: ======================= The competition commissioner noted that Apple and its partners violated three specific areas: — Apple and the two wholesalers agreed not to compete with each other and also to prevent other distributors to compete on price, “thereby sterilizing the wholesale market for Apple products.” — Secondly, premium distributors were forced to keep prices high to keep them at the same level as those of integrated distributors. — Third, Apple has “abused the economic dependence” of these premium distributors, by subjecting them to unfair and unfavorable commercial conditions compared to its network of integrated distributors. (These last two points relate specifically to the accusations eBizcuss had lodged against the company.) ======================= It was a known fact at the time (10 years back or so) that independent Apple retailers were not getting stock from Apple for certain products and therefore couldn't meet demand from their customers. There were even some "hot" products that could only be bought from apple.com or its own physical stores. I don't know if some of these practices were illegal or not (that's why we have government bodies to act as arbiters and enforcers of the rules), but it certainly didn't help the retailers. There's some more details in https://www.lemonde.fr/economie/article/2020/03/16/concurrence-apple-ecope-d-une-amende-inedite-en-france-de-1-1-milliard-d-euros_6033256_3234.html https://www.lemonde.fr/economie/article/2020/03/16/concurren....