Apple, Tech Data and Ingram Micro fined €1.24bn for being a 'cartel'

Apple and distributors Tech Data and Ingram Micro have been hit by a fine worth more than €1.24bn by an antitrust authority for allegedly fixing prices in the French market.

In the largest fine the watchdog has ever levied, L'Autorité de la Concurrence claims Apple illegally prevented its Apple Premium Resellers from competing on price, subjecting the French channel to "unfair and unfavourable commercial conditions".

The watchdog called the behaviour "an abuse of economic dependence on its premium independent resellers."

Apple was fined €1.1bn, while Tech Data and Ingram Micro were also sanctioned to the tune of €76.1m and €62.9m respectively for their alleged part in what the watchdog described as a "cartel".

President of L'Autorité de la Concurrence, Isabelle de Silva, said the three companies worked to "sterilise" the French market for Apple products.

"Apple has abused the economic dependence of these Apple Premium Resellers (APRs) by subjecting them to unfair and unfavourable commercial conditions compared to its network of integrated distributors. Given the strong impact of these practices on competition in the distribution of Apple products via Apple premium resellers, the authority imposes the highest penalty ever pronounced in a case."

The fines could be a serious blow to both distributors' bottom line. Tech Data's net income for full-year 2019 was $340.58m, meaning that the French competition watchdog's fine is equal to around a quarter of its annual net income.

Tech Data's share price immediately fell by 14 per cent to $114.80 in the opening hours of trading.

Apple made up 16 per cent of Tech Data's revenues in the same year, ahead of both HP and Cisco (at 11 per cent respectively).

Ingram Micro is a private company, but in full-year 2018 it produced $352.19m in net income. Based on these figures, the French authority's fine would amount to around 20 per cent of its annual net profits.

The watchdog's decision comes after a period of outright anger towards Apple in the French channel. Several APRs hit out against the PC and smartphone vendor in 2012 for unfairly favouring its own bricks-and-mortar stores when distributing supplies of its own products. French APR eBizcuss filed a law suit against Apple for starving it of products in favour of its own stores in 2012, only to withdraw from the French market later that year.

CPI approached all three companies for comment, but only Tech data responded before publication.

In a statement, Tech Data said: "Tech Data is aware of the decision by the French Competition Authority resulting from an antitrust investigation regarding the distribution of Apple products (excluding the iPhone) in France between 2005 and 2013.

"The investigation started in 2013 and was previously disclosed by Tech Data in filings with the United States Securities and Exchange Commission (SEC). We are determining how we will respond and therefore do not plan to provide additional comment at this time as this is a pending legal matter."

The French antitrust authority says it collected evidence in visits and seizure operations carried out at the HQ of Apple and both distributors, "the litigation of which ended in December 2017". 

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