The 2020 Apple decision in France: a new antitrust era for GAFAs?
On 16 March 2020, the French Competition Authority found Apple guilty of three anticompetitive practices and imposed a record-breaking fine of € 1.1 billion. Two Apple products wholesalers, Tech Data and Ingram Micro, were fined € 76.1 million and € 62.9 million respectively for participating in one of the infringements.
This decision followed a complaint filed by eBizcuss, a reseller of specialised high-end Apple products, in 2012. The full decision is yet to be published, as the French Competition Authority only released a press statement so far.
The French Competition Authority (the Authority) sanctioned three infringements relating to Apple’s sales of electronic products (except iPhones) on the French market:
1. Customers and products allocation between wholesalers Tech Data and Ingram Micro
Tech Data and Ingram Micro implemented the customer allocation mechanisms set up and monitored by Apple instead of freely determining their own business policy, thereby freezing market shares and preventing competition between the parallel distribution channels within the Apple brand.
2. Resale price maintenance
Resale prices were imposed on Apple Premium Resellers who source their products both via the wholesalers and Apple directly, thereby aligning the resale prices of Apple products in a large part of the retail market.
3. Abuse of a situation of “economic dependency” vis-à-vis Apple Premium Resellers
Through various practices, Apple placed its Apple Premium Resellers at a disadvantage compared to its own integrated retail network. These practices consisted, among others, of:
- organising a shortage of supply of new products, thereby forcing Apple Premium Resellers to order products from Apple stores
- organising a discriminatory treatment compared to its integrated retail network
- lacking transparency on the discounts applied to Apple Premium Resellers.
The Apple decision is extraordinary in many respects:
Most commentators noted that the € 1.1 billion fine against Apple is record-breaking. While it is true that the size of the fine is unmatched in France - with the previous highest fine imposed on Orange in 2015 amounting to € 350 million - other aspects of the decision are much more important.
eBizcuss filed its complaint in as early as 2012, which means it took 8 years for the Authority to resolve this matter (not to mention subsequent appeals proceedings before the Paris Court of Appeals or private damages claims). As set forth below, the Authority has realised that it needs to act much faster in the digital world to stop and crack down on illegal practices from GAFAs:
The Authority announced the inception of a “Digital Economy Unit” in charge of investigating anticompetitive practices in the digital world on 9 January 2020. Six weeks later, it published a report outlining its intention to play a proactive role in investigating and sanctioning anticompetitive practices in the digital industry. This has materialised already in a decision of 9 April 2020 against Google, whereby the Authority, following fast-track proceedings, adopted interim measures requiring Google to negotiate with press publishers and press agencies the remuneration of neighbouring rights within 3 months.
The Authority was also creative with its use of the Franco-French concept of abuse of “economic dependency”, the abuse of dominance’s next of kin.
Whereas dominance by one company is asserted objectively (primarily, with market shares) on any defined market; dependency is assessed subjectively: only the balance of power between two business partners is considered. This was particularly adequate in this case as Apple is not dominant in the electronic appliances market, but abused the Apple Premium Resellers’ state of dependency nonetheless.
While this is an old concept dating back to 1986 and well-known by French lawyers, it is mainly used in private litigation and only in rare occasions by the Authority. So far, the Authority has used it five times, most recently in its Google decision of 9 April 2020. It indicates a strategic choice by the Authority to use a softer and more flexible concept - from a regulatory standpoint - than the concept of abuse of dominance.
It is remarkable that Apple, given the existing French and European case law in relation to the commercial practices of leading companies, implemented knowingly and on purpose those illegal practices. This possibly explains the colossal amount of the fine and is unlikely to attract any sympathy from the Paris Court of Appeals nor from judges handling the private damages litigations.
Finally, the Apple and Google decisions combined with the organisational changes and policy statements of the French Competition Authority, clearly mark a challenging new era for GAFAs in France. A likely relief for consumers and businesses.