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Apple fined record $1.23 billion in France for price-fixing scheme

France’s competition agency has announced a $1.23 billion fine against Apple, claiming the tech giant conspired with distributors of gadgets such as the iPad to fix prices and limit competition.

The decision came from France’s L’Autorité de la concurrence and is its largest fine ever. The agency said Apple tightly restricted supplies and effectively required distributors like Tech Data and Ingram Micro to charge the same prices Apple charged through its online and physical retail stores.

“It is the heaviest sanction pronounced against an economic player, in this case Apple, whose extraordinary size has been duly taken into account,” said agency director Isabelle de Silva in a statement.

The agency also respectively levied fines of $84.7 million and $69 million against Tech Data and Ingram Micro for their roles in agreeing to terms that hurt smaller distributors.

Apple is among the Silicon Valley companies that have come under growing regulatory pressure from European Union regulators, as well as various member states. The company is still appealing a decision over its Irish tax breaks that the European Commission found allowed Apple to dodge more than $14.5 billion in taxes. Apple was also implicated in a deal that led to a $1.23 billion fine against Qualcomm and prevented other companies from competing fairly against the smartphone giant’s chip business. And last year Apple agreed to pay France $571 million in back taxes.

The latest dispute, according to the French competition agency, involved sales agreements for Apple products and services, though not iPhones.

The case has its roots in a dispute between Apple and one of its leading French resellers, eBizcuss. The latter accused Apple of abusing its position, and in 2012 the reseller shut down in France as a result of what it claimed was unfair competition. The company was part of the Apple Premium Reseller program, whose participants sell only Apple products.

The French competition agency said that under the APR program, partners were told in advance how many of each product would be allocated to their stores. Apple published “recommended” prices and then tightly restricted promotional materials a distributor could use. One distributor said if it ran a promotion Apple didn’t like, the company would retaliate by limiting product supply.

The result limited pricing competition for about half of the retail market for Apple products in France. In addition, the agency found that Apple limited supplies to APR partners during moments of heavy demand around the launch of new products to steer customers to its own stores. Because Apple knew that its APR partners operated on very thin margins, any shortfall in supply could be fatal, the French agency said in its announcement.

Under French law, a company is not allowed to work with distribution partners to determine prices and must treat partners the same way it treats internal sales channels. This includes allowing them to determine on their own how many and which products they want to order from a wholesaler, in this case Apple, the French agency said.

VentureBeat has reached out to Apple for a comment and will continue to update the story.

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