The CNMC fines Apple and Amazon 194 million euros for restricting competition in the online market

The National Commission of Markets and Competition (CNMC) has imposed a fine of 194 million euros on Apple and Amazon, “for agreeing and executing certain restrictions on competition in the online market or marketplace from Amazon” affecting third-party resellers of Apple products and competing Apple products. The fine comes a year after the Spanish regulator launched a sanction file against both companies, suspecting that they could have agreed to a series of trade restrictions.

The CNMC maintains that in October 2018 Apple and Amazon signed two contracts with which they updated Amazon’s conditions as Apple’s authorized distributor, and included several clauses restricting competition that affected the online retail sale of electronic products in Spain. According to the regulator, both companies agreed that only a series of distributors designated by Apple could sell products of its brand through Amazon.es. The result of the application of these clauses was:

• More than 90% of resellers who used Amazon to sell Apple products were left out.
• Sellers not authorized by Apple to sell their products on Amazon have lost an important sales channel.
• Sales of Apple products in that market were concentrated in Amazon itself, drastically reducing competition between resellers.
• Sales of Apple products through Amazon.es by sellers based in other EU countries were reduced, thus limiting trade between Member States.
• There was an increase in the relative prices paid by consumers for the purchase of Apple products on Amazon Spain.

CNMC concludes that the most affected resellers were unauthorized Apple dealers, “generally small operators who do not have a direct business relationship with Apple but who sell their products with their consent and who were the most active” and, therefore, those who exerted more competitive pressure. In addition to exclusion clauses, the CNMC reveals the existence of advertising clauses, which limited the possibility that brands competing with Apple could acquire advertising space on Amazon to advertise their products when searching for Apple products. Likewise, another clause limited Amazon’s marketing campaigns.

“As a consequence of the previous clauses, Apple sees the competitive pressure generated by the advertisements of the competition on the Amazon website in Spain reduced, and by the marketing campaigns that it can carry out and that the rest of the brands must support” says the CNMC. “Furthermore, these limitations directly harm consumers since (i) they limit their ability to discover new brands and/or alternative products to Apple’s; (ii) increase their search costs and (iii) reduce their ability to change (switching)”.

The CNMC orders the cessation of the conduct and, by how the fine is divided, 143,640,000 euros for Apple and 50,510,000 euros for Amazon, it indicates who has behaved worse. The sanction can be appealed.