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EU issues Mondelēz with €337.5 million antitrust fine

Mondelēz International has received a multi-million fine for hindering cross-border trade of its products, causing consumers to pay more for its products.

On 23 May 2024, the European Commission announced it had fined Mondelēz €337.5 million for hindering cross-border trade of chocolate, biscuits and coffee goods between member states. In April 2024, it was reported that the leading chocolate and biscuit producer would receive a fine for blocking cross-border sales .

In a speech on the adoption of the antitrust decision against Mondelēz for cross-border trade restrictions, Margrethe Vestager, executive vice-president in charge of competition policy, said: “We find that Mondelēz illegally restricted retailers from sourcing these products from member states where prices are lower,” Vestager said. “This allowed Mondelēz to maintain higher prices. This harmed consumers, who ended up paying more for chocolate, biscuits, and coffee,” Vestager added.

In light of the ongoing cost-of-living crisis and the principles surrounding the free movement of goods in the single market, Vestager said consumers have the right to buy cheaper products when they can be sourced at a cheaper price elsewhere in the EU. In addition, she said they should be free to do so in supermarkets when retailers import the cheaper product.

“Any company that hinders this freedom engages in illegal behaviour and should be sanctioned accordingly,” Vestager said. Mondelēz’s actions signal a breach of EU competition rules, and the Commission “remains committed to bringing down unjustified barriers to ensure a better functioning of the single market”, she added.

In breach of anticompetition laws

US-headquartered Mondelēz is one of the world’s largest chocolate and biscuit producers. While the company’s name may be unfamiliar to consumers, its portfolio of brands— which span Oreo, Toblerone, Côte d’Or, Milka, Ritz, and TUC—are well-known household names.

Following the Commission’s investigation, it found Mondelēz in breach of EU competition rules in two key ways. Firstly, engaging in anticompetitive agreements or concerted practices restricting cross-border trade of various chocolate, biscuits and coffee products. Secondly, the Commission said Mondelēz had violated the rules by abusing its dominant position in certain national markets to sell chocolate tablets.

“Such illegal practices allowed Mondelēz to continue charging more for its own products, to the ultimate detriment of consumers in the EU,” the EU Commission said in a press release.

In response to Ingredient Network, an EU Commission’s spokesperson highlighted its position on the ruling and its potential impact on parallel trade.

Vestager said: “Prices for food differ between member states. Trade over 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.”

The Commission started exploring the case in 2019, conducting inspections at Mondelēz’s business premises.

Reaching the multi-million fine amount

Detailing the fine level, the Commission noted that the infringements covered a large part of the EU and lasted between 2006 and 2020, except for coffee products, which Mondelēz divested in 2015.

“In setting the level of the fine, the Commission took into account the gravity and duration of the infringements as well as the value of Mondelēz’ sales relating to the latter,” the Commission said. It also considered that this type of behaviour has already been sanctioned. “This is really not a novel case,” said Vestager.

The legislators based Mondelēz’s €337.5 million fine on its 2006 Guidelines on fines. In reaching this decision, the Commission considered Mondelēz’s cooperation with the Commission under its cooperation procedure, in which the confectionery giant expressly acknowledged its liability for the infringement of EU competition rules. As a result, the Commission granted Mondelēz a 15% fine reduction.

Preventing parallel trade

Parallel trade is when traders and retailers try to buy products in countries with lower prices and then trade them to markets with higher prices. Consequently, parallel trade typically results in price drops in countries where those products’ prices are higher. These price drops mean savings for customers at the checkout. Parallel trade, therefore, works to lower prices, increase competition, and strengthen consumer choice.

Restrictions on where products can be sold subsequently restrict parallel trade. Restrictions to such parallel trade prevent national markets from becoming isolated and lower product diversity. Without the relevant anticompetition laws in place, manufacturers or suppliers would be able to charge higher prices, impacting consumers’ pockets.

The EU Commission states: “Restrictions to parallel trade amount to non-regulatory barriers to a better functioning of the single market and are among the most serious restrictions of competition.”

Advocating for anticompetition

“We are determined to uphold the fundamental freedoms in the EU and to ensure that EU citizens have access to the biggest variety at the lowest prices that the market can offer,” Vestager said.

The European Commissioner for Competition says several ongoing investigations are taking place in the food and beverage sector, including food delivery services and energy drinks.

The EU Commission has created a whistleblower tool designed to make it easier for consumers to report anticompetitive behaviour. With enabling anonymity vital, the tool uses a specifically developed encrypted messaging system that allows two-way communications.