Apple and Amazon fined 194 million for restricting competition in Spain

The Spanish Markets and Competitions Authority (CNMC) has fined Apple and Amazon a total of 194,150,000 euro for agreeing and executing certain restrictions of competition in the online market or “marketplace” of Amazon (www.amazon.es), affecting third-party resellers of Apple products and competing Apple products.

On October 31, 2018, Amazon and Apple signed two contracts updating Amazon’s terms as an Apple Authorised Reseller. They included several clauses restricting competition that affected the Internet (online) retail sale of electronic products in Spain.

Both companies agreed that only a series of distributors designated by Apple itself could sell Apple-branded products through the Amazon website in Spain.

As a result of the application of these clauses:

More than 90% of the resellers who had been using the Amazon website in Spain for the retail sale of Apple products were excluded from the main online market in Spain.

Sellers not authorised by Apple to sell their products on the Amazon website in Spain lost an important sales channel, to the extent that said website is the vehicle for most of the online purchases of electronic products in Spain.

Sales of Apple-branded products in said online marketplace were concentrated on Amazon itself, drastically reducing competition between resellers of Apple-branded products.

Sales of Apple products through the Amazon website in Spain 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 in said online market in Spain.

The resellers most affected by this clause were Apple’s unauthorised distributors (known as Non-Authorized Resellers), generally small operators who do not have a direct commercial relationship with Apple but who sell their products with their consent and who were the most active on the Amazon website in Spain and, therefore, those that exercised the most competitive price pressure on said website.

Through the advertising clauses, Amazon and Apple limited the possibility that brands competing with Apple could acquire advertising space on the Amazon website in Spain to advertise their products when certain searches for Apple products are carried out, as well as during the purchase process of said products.

The marketing limitation clauses establish that Amazon may not carry out, without the consent of Apple, marketing and advertising campaigns that are specifically aimed at customers who have purchased Apple products on the Amazon website in Spain and encourage these consumers to change from an Apple product to a competitive one.

As a consequence of the above 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. Likewise, these limitations directly harm consumers since they limit their ability to discover new brands and/or alternative products to those of Apple; they increase their search costs and they reduce their switching capacity.

The CNMC considers that these clauses, which jointly contribute to changing the sales dynamics of Apple products on the Amazon website in Spain, restrict intra-brand and inter-brand competition and constitute a single and continuous infringement of the Articles 1 of the Competition Law (LDC) and 101 of the Treaty on the Functioning of the European Union (TFUE), which began with their adoption in October 2018.

The CNMC orders the cessation of the conduct and fines the accused companies of the Apple Group with 143,640,000 euro and the accused companies of the Amazon Group with 50,510,000 euro.

It is recalled that a contentious-administrative appeal may be filed directly against this resolution before the National Court within a period of two months from the day following its notification.

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