Apple, Amazon Fined $225m By Italian Watchdog Over Beat Headphones

The Italian Competition Authority (ICA) has concluded its investigation into Apple and Amazon, and has hit both firms with a stiff financial penalty.

In July 2020 offices in Italy belonging to both Apple and Amazon were raided, as part of an investigation into whether both firms colluded so only selected resellers were allowed to sell Apple products, such as iPhones, iPad, and Apple Watch, and Beats headphones on Amazon’s Italian marketplace.

Now the ICA has concluded that both parties engaged in these practices, which are against EU competition law.

Italian fine

The ICA said the problem stems from a contract signed between Apple and Amazon in October 2018, which restricted the sale of Apple’s electronics and Beats-branded gear on Amazon.it to just carefully chosen resellers, the regulator announced on Tuesday.

This meant that even if a firm was an authorised Apple reseller, if it was not on a separate reseller list then they could not sell Apple and Beats products on Amazon.it.

Apple bore the brunt of the $225m fine, after it was fined 134.5m euros ($151m), while Amazon was pinged for 68.7m euros ($77m).

Amazon and Apple were instructed to also halt the anti-competitive arrangement, and allow more resellers to sell the hardware.

Apple had purchased premium headphone manufacturer Beats Electronics for a cool $3 billion back in 2014.

That move came as the Cupertino-based company sought to improve its street cred ahead of its iWatch launch that year.

Nothing wrong

But both Apple and Amazon have reacted strongly to the news and said they plan to appeal the fines.

“We strongly disagree with the decision of the Italian Competition Authority (ICA) and we intend to appeal. The proposed fine is disproportionate and unjustified,” an Amazon spokesperson told TechRadar Pro.

There was a similar sentiment from Apple.

“To ensure our customers purchase genuine products, we work closely with our reseller partners and have dedicated teams of experts around the world who work with law enforcement, customs and merchants to ensure only genuine Apple products are being sold,” an Apple spokesperson told The Register.

“We respect the Italian Competition Authority but believe we have done nothing wrong and plan to appeal,” the Apple spokesperson said.

Italian woes

Apple has been in trouble in Italy a few times before this.

In late 2015 for example, Apple opted to settle a corporate tax dispute with the Italian tax office, and handed over 318m euros (£235m).

The iPad maker had faced allegations that it had failed to pay corporate taxes to the tune of 879m euros (£649m).

And in 2011, Apple was slapped with a €900,000 (£750,000) fine by the Italian Antitrust Authority, which accused the iPad maker of misleading consumers over product guarantees.