I thought the function of fines WAS the deterrent effect? or is some aspect of this restitution? I thought this was payable to the EU itself, not spotify.
> I thought the function of fines WAS the deterrent effect? or is some aspect of this restitution? I thought this was payable to the EU itself, not spotify.
Maybe it's something akin to punative damages (https://en.wikipedia.org/wiki/Punitive_damages), where the "fine" component is assessed according to the actual harm measured and the "deterrent" amount is meant to make it sting as a punishment.
The law always needs a little something extra to deal with people like the guy who parks in handicap spaces because he can afford the fines.
Would be nice if fines like that were earmarked as probationary in the sense that if the bad behavior continues, they actually have to pay the fines plus a penalty, otherwise they get a diminished amount.
In most cases, the Commission sets a fine which is based on the harm caused by some anti-competitive conduct, with relatively small adjustments for extenuating or attenuating circumstances. In this instance it's the opposite; the economic harm was small but the adjustment was huge.
You're right that the logic - deterrence - is the same in both cases. But what's different (at least in my view), is the object of the deterrence.
Ordinary fines are designed to make anti-competitive behaviour unattractive in terms of the costs and benefits. Maybe some underhanded conduct generates €40m extra profit, but the risk of a €40m fine plus legal costs and adjustments makes it not worth it.
The trouble is that these fines might are essentially just rounding errors for large firms. In this case, a €40m fine would be tiny in relation to Apple's revenue stream (~€350bn euros a year), thus not an effective deterrent. That's for two reasons. First, the 40m figure is too low since a "significant part of the harm caused by the infringement consists of non-monetary harm, which cannot be properly accounted for under the revenue-based methodology as set out in the [Commission's guidelines]"[1]. Second, the fine is trying to to "deter [Apple and] other companies of a similar size and with similar resources from committing the same or a similar infringement"[1] even when they could absorb the ordinary (small) fine as essentially a rounding error on their cost of doing business. In that case, large conglomerates could basically just ignore competition law.
So here, the Commission is deterring all firms which have a "particularly large turnover" [2] (e.g. Big Tech firms) from using their power in one market to gain an advantage in another market, as in this case where Apple used its control over its App Store to gain an advantage in the music streaming market. The fining guidelines allow for fines to be much larger (~50x in this case) for tech giants, even if the actual infringement didn't cause that much quantifiable harm.
You're right, there's no restitution here. As you say, the fine is payable to the EU and would be paid into the EU budget.
It's insane that they think the deterrant to a single line of business should be based on the revenue of the business as a whole instead of that line of business. 0.5% of app store revenue would be far more reasonable than 0.5% of Apple revenue.
I think, in order to have the desired effect, the deterrant must be in proportion to the resources of the transgressor as a whole entity.
If its not, Apple can afford to behave anticompetitively with their appstore, hold on to an illegal position of power and use that to extract revenue for the other lines of business that they're in.
Morally, if we fine violations to the speed limit in proportion to the context of the transgression only it will not adapt to the income of the transgressor. That makes it practically legal for rich people to drive as fast as they wish.
I'd support fines for the whole business revenue if you can prove that's what the business is doing. Here it's pretty clear the app store is behaving anti-competitively to increase app store revenue. Apple doesn't sell more iPhones by making it harder to use Spotify on them.
I follow your reasoning, but by the same reasoning we could say that Apple shouldn't internally fund projects with the revenue from other projects. Each project should be supported by its own income stream.
To function as a deterrent, it needs to represent a cost that a company is unwilling to tolerate.
There are a few ways to think about this. One is deterrence based on cost-benefit analysis, which is essentially a game theoretic way to think about firm behaviour. The logic here would be to fine the firm enough to deter anti-competitive behaviour, as has been mentioned.
Another way to think about it, is to say that we care about safeguarding the process of competition itself. That could include ensuring that competition is fair, ensuring that firms can enter markets, ensuring consumers get to choose which firms to consume from, etc. There's lots of precedent for that in EU competition law [1]. Taking that view, Apple was using its dominant position to restrict the economic freedom of Spotify (and others) and thereby harming the process of competition. Specifically, it limited rival firms from "fully informing iOS users about alternative and cheaper music subscription services" (as per the press release), thus harming competition.
All that to say, if we take the objective of EU competition law as being to prevent large firms from exercising power over smaller firms and to protect the process of competition in a general sense, then these big fines are easier to justify.
Honestly, these multibillion dollar fines from the EU against US tech companies always have an air of 'Since we don't really have a domestic tech industry, these judgements don't really set a precedence for domestic companies, therefore let's just systematically use fines to collect cash'. An extra tax for big US tech companies doing business in Europe. Is there some truth to this?
Or maybe the US is just too comfortable with being the home of multiple large criminal organizations? Said crime syndicates then actually get fined for committing crimes on countries with actual rule of law, unlike the oligarchic farce that is the US justice system.
Maybe it's something akin to punative damages (https://en.wikipedia.org/wiki/Punitive_damages), where the "fine" component is assessed according to the actual harm measured and the "deterrent" amount is meant to make it sting as a punishment.
The law always needs a little something extra to deal with people like the guy who parks in handicap spaces because he can afford the fines.