European Commission opens investigation into Mondelez

European Commission opens investigation into Mondelez

BRUSSELS — The European Commission on Jan. 28 announced it has opened a formal antitrust investigation into Chicago-based Mondelez International, Inc. for potential cross-border trade restrictions on chocolate, biscuits and coffee products.

“Chocolates, biscuits and coffee are products consumed by European citizens daily,” said Margrethe Vestager, executive vice president in charge of competition policy at the EC. “We are opening a formal investigation to see whether Mondelez, a key producer of these products, might have restricted free competition in the markets concerned by implementing various practices hindering trade flows, ultimately leading to higher prices for consumers. Trade in the internal market can lower prices and increase the variety of products offered across member states. ”

In its Jan. 28 notice, the EC indicated that the market for chocolate, biscuits and coffee in the EU is worth “tens of billions of euros every year.” Concern has arisen that Mondelez may have restricted the so-called “parallel trade” of its chocolates, biscuits and coffee between EU member states through agreements and unilateral practices.

Specifically, the EC said traders and retailers try to procure products in the internal market where the prices are lower and trade them to markets where prices are higher, a practice that may lead to price decreases in countries where prices are higher.

In the case of Mondelez, the EC said it will investigate certain potentially anti-competitive practices by Mondelez, including:

  • 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;
  • Possibly refusing to supply certain traders with a view to restricting imports into certain markets.

The EC said that if violations are proven, Mondelez would be in breach of EU antitrust rules.

There is no legal deadline for bringing an antitrust investigation to an end. The duration of an investigation depends on a number of factors, including the complexity of the case, the cooperation of the undertaking with the Commission and the exercise of the rights of defense.

Mondelez has said that it “will work constructively with the European Commission as it conducts its review.”