European Commission Imposes Fine of Nearly EUR 340 Million on Mondelēz in Decision that May Portend Further Competition Scrutiny

• 23/05/2024
• News

The European Commission (Commission) announced this morning its finding of several competition law violations against Mondelēz (see, attached press release and remarks by Commissioner Vestager). Following what the Commission refers to as a “cooperation procedure” pursuant to which Mondelēz acknowledged its liability under the competition rules, Mondelēz was given a fine of EUR 337.5 million, which is in line with the expectations which the firm expressed in its financial reporting earlier this year and reflects a 15% reduction on the fine which would have applied in a fully adversarial procedure. The total exposure of Mondelēz will probably be higher when all costs, including possible pay-outs to aggrieved customers and other injured parties, will have been accounted for.
 
It will be necessary to study the non-confidential version of the Commission’s decision to understand fully what went wrong, but the press release and the Commissioner’s comments already offer useful clues:

• Mondelēz was found in breach of both Article 101, TFEU and Article 102, TFEU.
• The Commission identified no less than 22 restrictive agreements and concerted practices contrary to Article 101, TFEU. All of these seem to have involved arrangements by Mondelēz with a range of intermediaries (traders and brokers, but also exclusive distributors) to restrict cross-border trade. For example, specific traders were prevented from reselling in high-price territories. For their part, exclusive distributors were prohibited from honouring orders that originated elsewhere than in their assigned territory.
• The Commission also reached the conclusion that Mondelēz had abused its dominant position by refusing to supply a specific broker in Germany bent on exporting products to higher-priced countries and by ceasing the supply of specific chocolate products in the Netherlands to preclude their exportation to Belgium. The Commission did not offer details regarding the definition of the relevant market.
• According to the Commission, the common thread in its findings was a strategic choice on the part of Mondelēz to partition the internal market artificially and thus hurt consumers in the form of higher prices and less choice (in the guise of a diminished product diversity). Commissioner Vestager pointed out that “[t]his [was] really not a novel case”. She added in no uncertain terms that “[the Commission has] a clear case practice. We have a track-record of fighting territorial restrictions. The fact that they are illegal and violate competition rules is well established and companies need to be deterred from engaging in this type of illegal conduct”.
• The procedure against Mondelēz did not result from a complaint but from the Commission’s own initiative. This did not stop the Commission from highlighting again its whistleblower tool which allows individuals to make anonymous tip-offs.   

While this is not a case handled by the Belgian Competition Authority (BCA), it deserves specific attention from a Belgian antitrust perspective. The conduct for which Mondelēz was fined extended across the European Union but presented a close link to Belgium. For example, both abuses cited by the Commission involved attempts by Mondelēz to stop the trade in chocolate tablet products from neighbouring countries to Belgium.  For that reason, the case against Mondelēz is somewhat reminiscent of the Commission’s case against AB InBev which in 2019 gave rise to a fine against the brewer on account of that firm’s “deliberate strategy to restrict the possibility for supermarkets and wholesalers to buy Jupiler beer at lower prices in the Netherlands and to import it into Belgium” (European Commission press release IP/19/2488 of 13 May 2019).

At the heart of both cases is the concern shared by many regulators that retail prices for food in Belgium generally exceed those in countries such as France, Germany, and the Netherlands. A series of recent economic studies have sought to capture these price differences, but their outcomes were mixed in that Belgian prices had generally been found to develop in ways that benefited consumers. Still, the BCA indicated in January 2024 that price patterns in Belgium compared to prices prevailing in France and Germany and varying results across underlying product categories would require “more detailed investigation”. It added that possible causes for price differences, including private conduct such as territorial supply constraints, would “remain an important topic to keep on the (Belgian and EU) policy agenda” (BCA, “Recent trends in fast moving consumer good prices in Belgium and a comparison with the Netherlands, France and Germany”, Working Study CET-24-001, 25 January 2024)(see, Van Bael & Bellis Belgian Antitrust Watch News and Insights of 26 January 2024; see also, Van Bael & Bellis Belgian Antitrust Watch News and Insights of 15 February 2024). The BCA repeated that message on 26 April 2024 during the EU Competition Day conference which it hosted to mark the Belgian presidency of the Council of the European Union.