European Commission investigates Mondelēz restrictions

The European Commission opened a formal antitrust investigation to assess whether Mondelēz has restricted competition in a variety of national markets for chocolate, cookies and coffee by hampering the cross-border trade of these products between European Union (EU) member states.

Executive Vice President Margrethe Vestager, Head of Competition Policy, said: “We are opening a formal investigation to see whether Mondelēz, a key producer of these products, could have restricted free competition in the markets in question by implementing various practices that they hamper trade flows, ultimately leading to higher prices for consumers.»

Mondelēz is one of the largest producers of chocolate, biscuits and coffee in the European Union. The markets for the sale of these products are worth tens of billions of euros each year.

The Commission is concerned that Mondelēz may have restricted the so-called «parallel trade» of its chocolates, biscuits and coffee between EU member states through unilateral agreements and practices.

Traders and retailers try to purchase products in the domestic market where prices are lower and they market them in markets where prices are higher.

This usually leads to price declines in countries where prices are higher. Restrictions on such parallel trade can lead to isolation from a national market in which the manufacturer or supplier may charge higher prices to the detriment of consumers.

Restrictions on parallel trade can also lead to less product diversity.

Mondelēz

In particular, the Commission will investigate certain potentially anti-competitive practices by Mondelēz, including:

Possible limitations of sales territories within the EU through agreements that determine in which Member State a trader can or cannot sell the products, or that restrict passive sales.

Possible restriction of parallel trade through agreements that raise prices or limit volumes specifically for customers who market the products in the Member States.

Also possible agreements with customers not to participate in parallel trade or not to purchase products from parallel trade, among other things, in exchange for payments or other forms of compensation.

Possible restrictions on the languages ​​used on packaging, either unilaterally or through agreements with traders, thus creating friction in sales to other EU Member States.

Possibly refusing to supply to certain traders in order to restrict imports in certain markets.

Antitrust

If proven, the agreements and practices under investigation may create anti-competitive barriers to trade within the EU internal market in violation of Articles 101 and/or Article 102 of the Treaty on the Functioning of the European Union (TFEU).

The Commission will now carry out its in-depth investigation on a priority basis. The opening of a formal investigation does not prejudge its outcome.