EU Slaps Mondelez with €337.5 Million Fine
In a landmark decision, the European Commission has imposed a substantial fine of €337.5 million on Mondelez International, the American confectionery giant known for brands like Oreo and Cadbury Dairy Milk. The penalty comes in response to Mondelez’s actions which hindered the cross-border trade of chocolate, biscuits, and coffee within the European Union, effectively keeping prices high for consumers.
Illegal Practices Unveiled
The investigation, spearheaded by Margrethe Vestager, the EU’s competition chief, revealed that Mondelez had engaged in illegal practices to restrict the free flow of its products across EU member states. “This case is about the price of groceries. It’s a key concern to European citizens, especially during these times of high inflation and cost-of-living crises,” Vestager stated during a press conference.
Mondelez’s tactics included stopping the supply of chocolate bars in the Netherlands to prevent them from entering the Belgian market, where they could be sold at lower prices. This strategy, among others, was aimed at maintaining higher prices in specific markets, thereby exploiting its dominant position.
A History of Non-Compliance
The European Commission’s investigation, which began in 2019 and led to a formal probe in 2021, found that Mondelez’s practices dated back to at least 2006. These included refusing to supply wholesalers in Germany to prevent the resale of chocolate bars in Austria, Belgium, Bulgaria, and Romania, where prices were typically higher. Additionally, Mondelez required some customers to charge higher prices for exported products compared to domestic sales.
Impact on the Single Market
The Commission’s findings highlighted that Mondelez’s actions violated Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). By restricting cross-border trade, Mondelez artificially partitioned the internal market, preventing retailers from sourcing products from member states with lower prices. This manipulation allowed Mondelez to maintain inflated prices to the detriment of EU consumers.
Mondelez’s Response
In response to the fine, a spokesperson for Mondelez International described the incidents as “isolated” and mostly resolved before the Commission’s investigation. “This historical matter does not reflect who we are today or our strong culture of compliance,” the spokesperson asserted. The company has since bolstered its annual mandatory compliance program to prevent such issues in the future.
Cooperation and Fine Reduction
Despite the severity of the infringements, Mondelez’s cooperation with the investigation led to a 15% reduction in the fine. The Commission took into account the gravity and duration of the violations, as well as the value of the sales involved, when determining the final amount.
Moving Forward
This case serves as a crucial reminder of the EU’s commitment to maintaining a fair and competitive market. By penalising companies that engage in anti-competitive practices, the European Commission aims to protect consumers and ensure that the Single Market functions effectively, free from unjustified barriers. For Mondelez, the fine marks a significant moment of accountability and underscores the importance of compliance with EU competition laws.
As the dust settles, the broader implications of this decision will likely influence how multinational corporations conduct their business within the EU, promoting a more level playing field for all.
