There The European Commission has fined the US multinational food company Mondelēz International 337.5 million eurosfor hindering cross-border trade in chocolate, biscuits and coffee-based products between EU member states, in breach of EU competition rules.
The Commission “remains committed to eliminating unjustified barriers to ensure a better functioning of the single market”. Territorial supply constraints constitute, for Brussels, a non-regulatory obstacle to the correct functioning of the single market. Mondelez owns well-known sweets, biscuits and crackers brands, such as Toblerone, Oreo, Cote d’Or, Milka, Ritz and Tuc.
Fine and reasons
The amount of the fine, explains vice-president Margrethe Vestager, was reduced by 15% in light of the company’s collaboration with the investigation. The violations continued “from 2006 to 2020”, with the exception of coffee, a business sold in 2015. Mondelez, underlines Vestager, “has a dominant position in chocolate bars”, which is why the practices implemented constitute an abuse .
In particular, according to the Commission, Mondelēz has implemented 22 anti-competitive agreements or concerted practices. For example, it limited the territories or customers to which seven wholesalers could resell Mondelēz products. One of the agreements also included a provision ordering Mondelēz’s customer to charge higher prices for exports, compared to domestic sales. These agreements and practices took place between 2012 and 2019 and covered all EU markets.
The multinational food company also prevented ten exclusive distributors, active in some Member States, from responding to sales requests from customers located in other EU States, without prior authorization from Mondelēz. These agreements and practices took place between 2006 and 2020 and covered all EU markets. The Commission also found that, between 2015 and 2019, Mondelēz abused its dominant position. First of all, it refused to supply a broker in Germany, to prevent the resale of chocolate bars in the territories of Austria, Belgium, Bulgaria and Romania, where prices were higher. It even stopped supplying chocolate bars to the Netherlands to prevent their importation into Belgium, where Mondelēz sold these products at higher prices.
Belgians, explained Vestager, are great devourers of Cote d’Or chocolate bars. Therefore, the multinational has blocked supplies to the Netherlands to protect the profitable Belgian market, where citizens go crazy for the chocolate produced by the multinational, despite living in the homeland of chocolatiers. The praline was born in Belgium, thanks to the idea of Jean Neuhaus Jr, who in 1912 was inspired by the invention of his pharmacist grandfather, who in 1857, to facilitate the taking of medicines, covered them in chocolate. Instead of drugs, he put creams inside, creating the Belgian praline (which is very different from the French one, made of dried fruit covered in sugar). Neuhaus is still one of the largest chocolatiers in Belgium.
For the Commission, Mondelēz’s illegal practices prevented retailers from freely sourcing products in Member States with lower prices and artificially partitioned the internal market. The food giant’s objective was to prevent cross-border trade from leading to price decreases in countries where they were higher. These illegal practices have allowed Mondelēz to continue to charge more for its products, ultimately to the detriment of EU consumers.
“I assure you – Vestager said at the press conference – that prices can be quite different in Europe”, with differences between “10% and 40% and sometimes even greater”, therefore there is “great potential” for compress them, thanks to parallel trade. “There are also many different types and qualities of chocolate, biscuits and even coffee, but also between comparable products and even on the same product, in different countries”, there can be “huge differences” in prices, which the multinational, through described anticompetitive practices, sought to preserve, for the benefit of the profit and loss account.
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