Source: AFP
The EU on Thursday fined Mondelez, the U.S. confectioner behind major brands such as Toblerone and Oreo, 337.5 million euros ($366 million) for forcing consumers to pay more by curbing cross-border sales.
Mondelez, formerly Kraft, is one of the world’s largest producers of chocolate, cookies and coffee, with revenue of $36 billion last year.
The EU fined Mondelez “because it restricted cross-border trade in chocolate, biscuits and coffee products within the European Union,” EU Competition Commissioner Margrethe Vestager said.
“This hurt consumers, who ended up paying more for chocolate, cookies and coffee,” he told reporters in Brussels.
“This case is about grocery prices. It is a key concern for European citizens and even more evident in times of very high inflation where many are in a cost of living crisis,” he added.
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The penalty is the ninth largest EU antitrust fine and comes at a time when the cost of food is a major concern for European households.
Businesses have come under scrutiny for showing higher profits despite rising inflation after Russia invaded Ukraine in 2022, but it has since slowed.
The free movement of goods is one of the key pillars of the EU’s single market.
Mondelez brands also include Philadelphia cream cheese, Ritz crackers and Tuc crackers as well as Cadbury, Cote d’Or and Milka chocolate brands.
The EU investigation dates back to January 2021, but suspicions had led the bloc’s investigators to raid Mondelez offices across Europe in November 2019.
The European Commission, the EU’s powerful antitrust regulator, said Mondelez had “abused its dominant position” in breach of the bloc’s rules by restricting sales to other EU countries with lower prices.
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For example, the commission accused Mondelez of withdrawing chocolate bars in the Netherlands to prevent them from being resold in Belgium, where they were sold at higher prices.
“Isolated incidents”
The EU said Mondelez restricted traders’ ability to resell products and ordered them to charge higher prices for exports compared to domestic sales between 2012 and 2019.
According to the Commission, between 2015 and 2019, Mondelez also refused to supply a trader in Germany to avoid reselling chocolate in Austria, Belgium, Bulgaria and Romania, “where prices were higher”.
Vestager said that within the EU, prices for the same product can vary significantly, from 10 to 40 percent depending on the country.
The issue is of serious concern to EU leaders.
Greek Prime Minister Kyriakos Mitsotakis, in a letter over the weekend to European Commission chief Ursula von der Leyen, urged the EU to tackle multinationals and railed against different costs for branded consumer staples across member states.
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Vestager stressed the importance of traders’ ability to buy goods in other countries where they are cheaper.
“It increases competition, lowers prices and increases consumer choice,” he added.
Mondelez responded by saying the fine related to “historical, isolated incidents, most of which were stopped or remedied long before the commission’s investigation.”
“Many of these incidents related to business dealings with brokers, which typically take place through sporadic and often one-off sales and a limited number of small-scale distributors developing new businesses in EU markets where Mondelez does not have a presence or trade product,” she added in a statement.
The giant last year set aside 300 million euros in anticipation of the fine.
“No further action will be needed to fund the fine,” it said.
Source: AFP