France’s competition agency today slapped Apple Inc. with a 1.1 billion euro ($1.23 billion) fine for conspiring with its wholesalers in that country to fix prices and limit competition.

Reuters said the verdict, from France’s L’Autorité de la Concurrence, is the largest fine that the agency has ever imposed. According to the agency, Apple tightly restricted supplies and insisted that its two main distributors in the country, Tech Data Corp. and Ingram Micro Ltd., both charge the same prices that it charged through its physical and online retail stores.

“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,” said Isabelle de Silva, president of the French Competition Authority. “It is the heaviest sanction pronounced against an economic player, in this case Apple, whose extraordinary size has been duly taken into account.”

Tech Data and Ingram Micro were also slapped with fines of $84.7 million and $69 million, respectively.

The case involved price gouging in sales agreements for Apple’s products and services, but not for its iPhones. It all began with a dispute between Apple and one of France’s top resellers, a company called eBizcuss, which was at one time involved in the Apple Premium Reseller Program, where participants sell only Apple products.

The French competition agency said that under the APR program, partners were told in advance how many of each product would be allocated to their stores. Apple also published “recommended” prices and then tightly restricted promotional materials a distributor could use. One distributor said that if it ran a promotion Apple didn’t like, the company would retaliate by limiting product supply.

Apple’s practices resulted in pricing competition being limited in about half the retail market for its products in France. The agency also found that Apple had limited supplies to its APR partners during periods of heavy demand, such as when new products were launched, in order to drive more customers to its own stores.

French law prohibits companies from working with their distribution partners to determine prices. As such, they must allow resellers to determine their own price strategy, and choose which and how many products they wish to order from a wholesaler.

For its part, Apple continues to insist it hasn’t done anything wrong, and that it will appeal the fine. “The French Competition Authority’s decision is disheartening,” the company said in a statement. “It relates to practices from over a decade ago and discards 30 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.”

Constellation Research Inc. analyst Holger Mueller told SiliconANGLE it wasn’t surprising to see the outcome of this case go against Apple, as Europe’s regulatory bodies are not shy about going after technology companies these days.

“But the accusations against Apple aren’t implausible, especially when the company has shown before that it wants to control every aspect of its business, platforms and services,” Mueller said.

This is the second time Apple has been fined by French authorities this year. In February the company was hit with a 25 million euro fine for throttling older iPhones in order to “encourage” customers to update to a newer model.

Photo: Niels Epting/Flickr