The EC has raised concerns that the manufacturer has restricted access across borders between member states, inflating the prices of its products.
Under EU rules, retailers and traders are able to buy stock from countries where they are sold cheaper and trade it in the countries where the prices are higher. The investigation will assess whether Mondelēz has been preventing this from happening.
‘Restriction of free competition’
EC executive vice-president in charge of competition policy Margrethe Vestager said: “We are opening a formal investigation to see whether Mondelēz might have restricted free competition in the markets concerned by implementing various practices hindering trade flows, ultimately leading to higher prices for consumers.”
Key areas under investigation included possible limitations on which EU states can or cannot sell its products, possible curtailing of parallel trade and restrictions on the languages used on packaging either unilaterally or through agreements with trades. Full details can be found in the box below.
Commenting on the investigation, EuroCommerce director-General Christian Verschueren said: “While not wishing to pre-empt the outcome of this particular investigation, we are happy to see the Commission taking further action on territorial supply constraints.
€14bn cost to consumers
“This is an issue we have been flagging for many years and whose impact – a cost to European consumers in the magnitude of €14bn (£12.4bn) – was confirmed in the Commission study released last November.”
Verschueren hoped the investigation would help to create a lasting solution that will allow for better sourcing within the single market.
If proven, the agreements and practices under investigation may create anticompetitive obstacles to trade within the EU Internal Market in breach of Articles 101 and/or Article 102 of the Treaty on the Functioning of the European Union (TFEU). Under EU competition law, Mondelēz could face a fine of up to 10% of the overall annual turnover of the company.
Commenting on the investigation, a Mondelēz spokesperson said: We learnt about the European Commission's announcement that it has opened a formal investigation into Mondelez International's practices related to the cross-border supply of products within the European Economic Area. We will work constructively with the European Commission as it conducts its review.”
Action taken against Mondelēz followed a similar investigation by the EC into the confectionery manufacturer over suspected anti-competitive practices in November 2019. EU regulators launched and unannounced raid of its premises over concerns that prices for its products varied significantly across EU member states.
EC investigation into Mondelēz price fixing
The EC is investigating:
- Possible limitations of the 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 curtailing of parallel trade through agreements that raise prices or limit volumes specifically for customers that trade the products across member states;
- Possible agreements with customers not to engage in parallel trade or not to procure products from parallel trade, inter alia, in exchange for payments or other forms of compensation;
- Possible restrictions on the languages used on packaging either unilaterally or through agreements with traders, thereby creating friction on sales to certain other EU member states;
- Possible refusal to supply certain traders with a view to restricting imports into certain markets.