The European Commission has concluded proceedings regarding infringement of competition on the EU market by Mondelez International, a giant in the chocolate, biscuit, and coffee industry. The Commission found Mondelez guilty of concluding agreements restricting competition on the European market, aiming at limiting trade between individual countries, and imposed a fine on the company in the amount of 337.5 million EUR. The amount of fine is impressive, as is the portfolio of brands owned by Mondelez, which includes ones such as Milka, Oreo, Cote d’Or., LU, Cadbury, and Toblerone.

How did Mondelez violate the law?

As a result of a proceeding initiated in 2019 against Mondelez, the Commission found that the company illegally restricted cross-border sales across the EU to maintain higher prices for its products to the detriment of consumers. It divided the Community market into smaller national parts, blocking the buying and selling of its products between national markets at more attractive prices than those set by the company in each country. Due to food prices, and there Mondelez products’ prices, varying from country to country, trade between EU countries could lower product prices and ensure better availability of them. As a part of the actions mentioned above, the company refused, i.a.: supplying an agent in Germany to prevent him from reselling chocolate products in Belgium, Austria, Bulgaria, or Romania, where Mondelez products prices were higher.

Examples of Mondelez’s actions

For example, the Cote d’Or brand, established in 1883, is particularly popular in Belgium, where it covers most of the chocolate stock in stores (according to Nielsen’s research from 2019 the calculated share is at 65%). In Belgium, this brand’s products are more expensive than in Germany or the Netherlands. As a part of its anti-competitive activities, to maintain higher prices on the Belgian market, Mondelez stopped deliveries of chocolate products to the Netherlands to prevent their import into Belgium.

Price war with Rewe

Moreover, the media recently reported on a price war between Mondelez and the German supermarket chain Rewe, whose stock included no products from brands owned by Mondelez, such as Oreo, Milka, and Tuc. According to the reports, Mondelez suspended deliveries in Response to Rewe’s failure to accept its demands concerning products’ prices. Having such a large market share, Mondelez could try to force buyers to pay higher prices.

Inflation and consumer protection

The Commission pointed out that, especially in current times, when inflation is driving up food prices, protecting consumers against artificial price manipulation is crucial. Particularly as chocolate prices rise due to rising raw material costs because of low yields in West Africa, where about 70% of the world’s cocoa crops are located. It is believed that the decline in cocoa production is caused by climate changes causing unfavorable weather conditions, i.e. higher temperatures, and less rainfall.

Notably, the fine imposed on the company was reduced by 15% due to Mondelez’s cooperation in the investigation and admitting to violating the law.

Mondelez’s statement

The company issued a statement saying that the illegal activity identified by the Commission concerned only “historical, isolated incidents, most of which ceased or were remedied well in advance of the Commission’s investigation.” Mondelez explained that many of these incidents were related to business dealings with brokers, which are often one-off sales or were related to the actions of small-scale distributors running the business in EU markets in which Mondelez is not yet present or where it doesn’t introduce some of its products to the market. The company assured that it accounted for “a very limited part of Mondelez International European business.”

Our Law Firm’s lawyers have many years of experience in advising on competition and European law. Owing to their extensive experience and vast knowledge our experts successfully represent clients before EU courts, aiding in complex cases concerning violations of competition law, antitrust policy, and market regulations.