Brussels (Brussels Morning) – The European Commission fined Mondelēz €337.5 million for hindering cross-border trade of chocolate, biscuits, and coffee, violating EU competition rules to maintain higher prices.
The European Commission has fined Mondelēz International, Inc. (Mondelēz) €337.5 million for curbing the cross-border trade of chocolate, biscuits and coffee products between Member countries, in violation of EU competition rules. The EU Commission states that it remains determined to bring down unjustified barriers to ensure a more suitable functioning of the Single Market. Territorial supply restrictions by suppliers are a type of non-regulatory barrier to the proper functioning of the Single Market.
Mondelēz, located and headquartered in the US, is one of the world’s biggest producers of chocolate and biscuit products. Its portfolio contains well-known chocolate and biscuit brands such as Côte d’Or, Milka, Oreo, Ritz, Toblerone and TUC and until 2015 coffee trademarks such as HAG, Jacobs and Velours Noir.
Which EU Rules Did Mondelēz Breach?
The European Commission‘s investigation uncovered that Mondelēz breached EU competition rules: (i) by employing anticompetitive agreements or concerted practices aimed at hindering cross-border trade of various chocolate, biscuit and coffee products; and (ii) by manipulating its dominant position in specific national markets for the sale of chocolate tablets.
How Did Mondelēz Restrict Cross-Border Trade?
In particular, the Commission found that Mondelēz employed twenty-two anticompetitive agreements or concerted practices, in violation of Article 101 of the Treaty on the Functioning of the European Union (‘TFEU’), by Restricting the territories or customers to which seven wholesale customers (traders/“brokers”) could resell Mondelēz’ products. Moreover, it Prevented ten exclusive distributors engaged in certain Member States from replying to sale requests from customers located in other Member States without prior approval from Mondelēz.
The Commission also uncovered that, between 2015 and 2019, Mondelēz manipulated its dominant position, in violation of Article 102 of the TFEU, by Refusing to supply and Ceasing the supply of chocolate tablet products.
How Did Mondelēz Manipulate Market Dominance?
The Commission concluded that Mondelēz’s illegal practices stopped retailers from being able to freely source products in Member States with more inferior prices and artificially partitioned the internal market. Mondelēz desired to avoid that cross-border trade would lead to price reductions in countries with higher prices. Such illegal practices permitted Mondelēz to continue assessing more for its own products, to the ultimate liability of consumers in the EU.
The fine was imposed on the basis of the Commission’s 2006 Guidelines on fines. In setting the level of the penalty, the Commission took into account the gravity and course of the infringements as well as the value of Mondelēz’s sales connecting to the latter.
In addition, the EU Commission took into account the fact that Mondelēz collaborated with the Commission under the cooperation procedure and expressly accepted its liability for the infringement of EU competition rules. Therefore, the Commission gave Mondelēz a 15% fine reduction. Based on this process, the Commission imposed a €337.5 million fine on Mondelēz.
Why Is the EU Targeting Mondelēz’s Pricing Practices?
Margrethe Vestager, Executive Vice-President in charge of competition policy said, “Prices for food differ between Member States. Trade over the borders of Member States in the internal market can lower prices and increase the availability of products for consumers. This is especially important in times of high inflation. In today’s decision, we find that Mondelēz illegally limited cross-border sales across the EU. Mondelez did so to maintain higher prices for its products to the detriment of consumers. We have therefore fined Mondelēz €337.5 million.”
