
Apple fined $1.2B by French antitrust authorities - cj
https://www.cnbc.com/2020/03/16/apple-fined-1point2-billion-by-french-competition-authorities.html
======
MichaelApproved
$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.

~~~
nuclearnice1
The corporation has owners and operators. These fines rightfully hit the
owners. I would suggest that fines also hit the operators.

If Tim Cook paid $200 million dollar fine or went to jail for 15 days for
this, internal controls and compliance would be rock solid.

I think of the Madoff scandal. If Greg Katz[1], Saul Katz[2] and Fred
Wilpon[3] had been jailed, we might avoid the next company that followed
Sterling Equities lead in enable a huge fraud. These guys were next to the
fraud for 20 years and skated with a fine. Just an example.

Punish individuals not just companies. James Surowiecki wrote about it in the
New Yorkerin 2014, SEC chair Chair Jay Clayton has mentioned it in 2017, and
Biden mentioned it last night in the debate.

[1]
[https://en.m.wikipedia.org/wiki/Participants_in_the_Madoff_i...](https://en.m.wikipedia.org/wiki/Participants_in_the_Madoff_investment_scandal#Greg_Katz)

[2]
[https://en.m.wikipedia.org/wiki/Saul_Katz#Madoff_Ponzi_Schem...](https://en.m.wikipedia.org/wiki/Saul_Katz#Madoff_Ponzi_Scheme)

[3]
[https://en.m.wikipedia.org/wiki/Fred_Wilpon#Madoff_investmen...](https://en.m.wikipedia.org/wiki/Fred_Wilpon#Madoff_investment_scandal)

~~~
IMTDb
I, for one, would be immediately leaving my C-level position in a startup out
of the fear that one of my colleagues is doing something terribly wrong behind
my back. I - really - dont think that's the cas. But if there is the slightest
chance that I might end up behind bars and get my life upside down because a
judge thinks I am responsible as well, I will close the company and fire all
employees - it's just not worth it.

~~~
glitchc
Your colleagues, maybe not, but certainly you are culpable for your direct
reports. And we are not talking about rogue employees here performing one-off
acts such as absconding with private/privileged data, but rather an
institution-wide mode of operation that is deliberate and determined by a
favourable cost-profit analysis.

Yes, if you advocate that or even tacitly support it, you should definitely
stand to lose your shirt. If that’s too much for you, gardening is always
available as an occupation. Others will be happy to fill your shoes.

Ex: If you are the CEO of Juul, you definitely need to go to jail. I see Juul
marketed to kids everywhere. Once science confirms that it’s just as harmful
as cigarettes, I want all the C-levels in jail and their fortunes stripped. I
don’t for one second believe that they thought such a product could not
possibly be harmful. They are there to make a profit, end-user health be
damned.

~~~
smabie
There’s no way that ecigs are as harmful as cigs, so you might be waiting a
long time.

------
crazygringo
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
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
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.

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

------
KKKKkkkk1
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
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
Unless your point is that the pricing is actually varied in France, this
antitrust decision reads like selective enforcement of market regulations --
protectionism.

~~~
yohannparis
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
> 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.

~~~
yohannparis
Then you argue about sovereignty.

Any country will never let the law of a foreign country apply to commerce done
on its territory. Saying otherwise is heresy.

~~~
jldugger
To revisit your earlier statement:

> The provenance of a company has nothing to do about the market regulation of
> the buyer country of residence.

If a law is selectively enforced against foreign entities, provenance suddenly
does matter. That is my only point. It undermines the spirit of free trade and
invites retaliation, leaving everyone worse off.

------
jariel
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...](https://techcrunch.com/2020/03/16/apple-fined-
record-1-2b-in-france-over-anti-competitive-sales-practices/)

~~~
swisspol
> 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/concurren...](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).

~~~
jariel
>>>> "When the US fines foreign banks, VW group and others for incredibly
higher amounts of money, it's fair-game"

Who said this is 'fair game'?

>>>>> "France was one of the top markets for Apple and had 20 years ago a
vibrant network "

A) '20 years ago' Apple was a completely different company, they were 1/20th
the size. They are a completely different company, in every way.

B) 'France was one of the top markets'? Apple sales in France have
dramatically increased during this time - so I don't understand this point.

C) Apple can distribute generally how they please as long as they're not
breaking the law.

>>>> "The "Autorité de la Concurrence" probably has the best grasp compared to
anyone on HN regarding what is "normal business practices"

So your argument is _' trust the authority of the French government because
their logic is infallible'_ \- while in the very same comment expressing that
the US is engaged in 'arbitrary fining of foreign banks'?

No, we should not trust them at all, we should demand transparency.

>>>> As far as the specific points of law:

1) "Agreeing not to compete with one another". Really? Or is it that Apple
required them to sell at specific prices - which is a very common practice.

If you are Apple, why would you engage in price collusion, which is illegal
everywhere, when you can dictate end prices? You can 'force' the wholesalers
'not to compete' \- this happens in every industry, all the time, and it's not
illegal.

2) "premium distributors were forced to keep prices high"

This is not generally illegal and it's common practice!

3) "Apple has “abused the economic dependence” " \- this is merely a claim,
there's no substance behind it.

>>>>>>>>>>> "It was a known fact at the time that independent Apple retailers
were not getting stock from Apple for certain products"

Having an amazingly hot product that is selling out everywhere is not illegal,
and favoring some channels over others is not either.

But all of this is missing the point:

\- Governments, US or French, applying regulatory law is important, obviously,
it's important that actions are applied broadly, judiciously and with merit.

Swiss banks have been hiding tax cheaters, so it's pretty reasonable that the
US would go after them. As far as other Trump-era fines, well it depends,
obviously, he's engaged in some nasty stuff, but it doesn't justify the other
way around.

\- France is using their political and legal apparatuses as a means to grab
revenue. Their economy is weak, they see this 'big American firns' making tons
of cash, and they want some money. This is partly the motivation and its sad.

\- There's a number of laws they could change that would more fairly derive
revenue derived from Apple, FB, Google, for example, local taxes on ads, and
of course, fixing the massive EU tax loopholes. This would be more consistent
with 'good governance'.

\- All of this is the loser's strategy. What they need is their own champions,
which should be the primary focus. This will entail a whole set of reforms,
and the willing effort and participation of the public at large as well.

------
throwGuardian
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
In the US corporations buy, sell and trade lawmakers like kids once traded
baseball cards.

------
codingslave
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
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-c...](https://www.reuters.com/article/us-eu-budget/eu-leaders-to-clash-
over-money-as-brexit-blows-hole-in-budget-idUSKBN20D2V0)

"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. "

~~~
TheOtherHobbes
The EU's total GDP is $18.8 trillion, which is very close to the GDP of the
US, and much larger than the GDP of China.

The total EU budget is much less than 1% of that, and is entirely
discretionary spending on long-term strategic policy goals, infrastructure,
and social investment.

And having a "costly" challenge of becoming carbon neutral by 2050 is a lot
more realistic than the US policy on carbon neutrality, which is "We'll get
back to you on that, but probably not until the coastal flooding and economy-
destroying extreme weather events becomes impossible to ignore."

~~~
thu2111
Yes, but the EU budget is special in several ways.

One is that they can't directly control most tax rates. The EU isn't funded by
direct income taxation, for instance. But they can raise funds via fines,
which aren't tried in court and go directly into the EU's own budget (there's
a huge conflict of interest here).

Another is that the EU's budget normally only ever goes up. It's a part of the
whole plan for the EU to constantly subsume more and more from national
governments. The obvious view of the EU is it has a budget so it can provide
services but this isn't how the EU officials themselves see it. That's why the
fight over the Brexit budget hole is so bitter. Someone unfamiliar with the EU
might think, well, the EU is smaller now, so it should be just fine with a
correspondingly smaller budget. But it's not that way because the size of the
budget is psychological. If it shrinks it's the project going into reverse,
not a mere re-allocation of service resources.

I think we keep seeing dubious fines by the EU against US tech firms and
although it's unpopular, I tend to agree with adventured. A lot of these fines
are enormous and backed by no real robust system of justice. A government
simply decrees without trial that a tech firm must pay them a billion euros. A
billion here, a few hundred million there - it starts to add up. From the EU
perspective sucking gold out of tech firms is not only free money but even
better, populist free money, because they can demonise these companies and
claim to be fighting for the consumer. Whether they actually are or not
doesn't get a close look.

------
Mindwipe
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
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
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.

