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Apple (AAPL) stock price dropped by around 13% in the premarket and is falling in the trading session today as well. This is due to a fine of about $1.2 billion imposed by the French antitrust regulators.
Apple Inc (NASDAQ: AAPL) stock price was down 12.26% in the premarket. The stock price was at $243.90. This wasn’t the case though on Friday. Sources say that the price of the stock ended on Friday at $277.97. The fall has reportedly happened due to a € 1.1 billion (about $1.2 billion) fine imposed by the French Anti-trust authorities.
As the trading began, AAPL is also in red. It is over 11% down and is trading at $245.50.
The Cupertino California giant was fined such a huge amount by the French Competition Authority. This was because of the technology giant’s cartelization of its distribution network.
Fines Are for Price-Fixing
The French Competition Authority has allegedly accused Apple (AAPL) of ensuring zero-competition. This allegedly occurred when Apple entered a non-competition agreement with two of its major distributors. The two distributors also allegedly fixed prices to the disadvantage of the general market.
Sources say that Tech Data was fined € 76.1 million while Ingram Micro was fined € 62.9 million as well. Many within the European technology industry say that this is the highest ever fine imposed by the French Authorities. The French Competition Authority has indicated this as well. According to sources, Isabelle De Silva who is the President of the Authority said:
“Apple and its two wholesalers agreed not to compete and prevent distributors from competing with each other, thereby sterilizing the wholesale market for Apple products,”
Apple denies this though. The company that is one of the biggest technology giants in the world said that this wasn’t the case. Apple spokesperson stated:
“The French Competition Authority’s decision is disheartening. It relates to practices from over a decade ago and discards thirty years of legal precedent that all companies in France rely on with an order that will cause chaos for companies across all industries. We strongly disagree with them and plan to appeal.”
Apple has also faced similar issues this year. The Authority issued a €25 million (about $26 million) fine 60 days ago. This had to do with software updates for older phones.
Apple (AAPL) Stock Price Faces Many Challenges
Apple (AAPL) stock price hasn’t fared well in recent times. The stock recently slid to new lows as COVID-19 deeply affected its business model to the core.
Apple even had to adjust its forecast for the March quarter to soothe the frayed nerves of investors. As the COVID-19 situation worsened in China, Apple had to close down its retail stores. Things have continued to go south as the situation turned into a big mess across the globe.
The anti-trust rulings couldn’t have come at a more inopportune time. Anti-trust regulation in Europe isn’t though. Other technology giants such as Microsoft Corporation (NASDAQ: MSFT) and Google (NASDAQ: GOOGL) have suffered at the hands of European regulators.
The question though is how Apple seeks to define its moves and responses. That is, now that it has become a new target for regulators. This is what investors will be observing.