Apple is facing an antitrust investigation over engaging in price-fixing with Amazon over Apple products and Beats headphones. Antitrust officials reportedly searched Apple and Amazon’s offices on Tuesday and an official investigation is underway.
The Federal Trade Commission (FTC) opened a similar investigation last year, suggesting that it was a price-fixing agreement between the dominant retailer and a well-known brand. According to official law, it is illegal to do so under Section 1 of the Sherman Antitrust Act.
Apple’s alleged Price-fixing
According to Reuters, the investigation was opened in Milan and will look into whether or not the company has established an anti-competitive agreement to prevent other electronic retails form being included in Apple’s official program to sell products on the platform.
If Apple and Amazon had reached an agreement to block the sales of products by non-authorized retailers, it could be considered as price-fixing for excluding sellers wanting to compete on the price for some products.
Both companies are likely to defend the agreement by commenting that it was reached in order to address the issue of retailers using the e-commerce website for counterfeiting the company’s products, especially chargers. The problem is described as:
Even buying from reputable websites like Amazon hasn’t always been a guarantee. The company at one point conducted its own tests, finding that almost 90% of ‘genuine’ chargers sold through Amazon were fake. Amazon responded by creating a brand registry program, and later partnered with the company to create an Authorized Reseller store.
The new antitrust probe adds to the lost list of investigations that are currently underway or have reached a verdict. The company is also under investigation by the EU for Apple Pay and iOS App Store, Removal of parental control apps from the App Store, Determination of search result rankings, In-app purchase mechanism, and more. Recently, the company also received a verdict in its favor following the long Irish tax bill investigation.