The European Commission has fined Mondelez almost €340 million for imposing territorial restrictions on customers. Restricting parallel trade is a violation of competition rules.
The fine imposed by the European Commission (the Commission) was prompted by Mondelez’s longstanding practices aimed at restricting imports and exports by customers. Mondelez is the world’s largest producer of chocolate, biscuit and coffee products (including Milka and Oreo). According to the Commission, Mondelez thereby violated the cartel prohibition (Article 101 TFEU) and the prohibition on abuse of a dominant position (Article 102 TFEU).
The Commission established several violations of the cartel prohibition. First, Mondelez restricted the territories and customers to which seven major traders were allowed to resell the products. One trader was obligated to charge a higher price when exporting abroad. Second, Mondelez prevented ten exclusive distributors from responding to sales requests from other Member States without prior permission from Mondelez.
Mondelez furthermore abused its dominant position. It had refused to supply chocolate bars to a German trader in order to prevent resales in Austria, Belgium, Bulgaria and Romania, where prices were higher. For that same reason, Mondelez had also allegedly stopped supplying chocolate in the Netherlands, to prevent the products from being sold in Belgium.
This fine is in keeping with the increasing political and regulatory attention to price differences between EU countries due to restrictions on interstate trade. In 2019, the Commission fined brewer AB InBev €200 million for similar breaches. The basis on which the fine imposed on Mondelez was set differed from other cases. The Commission had previously based the fine on 8% of the turnover in question. In this case, however, the Commission opted for a rate of 10%. It hopes this will act as a deterrent.
The fine imposed on Mondelez does not change the possibility for suppliers to impose specific sales restrictions on buyers in the context of selective or exclusive distribution. At a market share below 30%, for instance, selective distributors are allowed to prohibit sales to unselected resellers. It is also allowed to appoint up to five exclusive distributors per territory or customer group and to prohibit other buyers from actively supplying in that territory or to those customers. Mondelez’s territorial restrictions went much further and were aimed at preventing price competition.
Interestingly, on the same day on which the Mondelez fine was announced, the Netherlands, together with seven other Member States, came up with a proposal to further restrict territorial supply restrictions in the EU. The proposal concerns a ban on discrimination based on the place of establishment, which could prevent restrictions on parallel trade. The Commission has stated that it will investigate new ways of addressing such restrictions. It has also announced that new fines are in the pipeline. Suppliers should therefore beware.
This blog has also been published in the Snelrecht section of the Mr. journal. The article can be read here.
Information on dawn raids by ACM and the European Commission can be found at invalacm.nl.
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