Shropshire Star

Mondelez: Food multinational with Chirk site fined £288 million by European Commission

A food company with a factory on the Shropshire/Wales border has been fined the equivalent of £288 million for breaching European Commission competition rules.

Mondelēz has a site in Chirk. Photo: Google

Mondelēz - which has an annual revenue of about $26.5 billion and operates in more than 150 countries - has been ordered to pay the hefty fine by the European Commission.

Headquartered in the US, Mondelēz's portfolio includes well-known chocolate and biscuit brands, owning Cadbury as well as Toblerone, Milka, Oreo, Ritz, and TUC, and until 2015, coffee brands such as Hag, Jacobs, and Velours Noir.

The food company has a factory in Chirk and a Mondelēz-Cadbury site in Bournville, and has been fined for "hindering the cross-border trade of chocolate, biscuits, and coffee products between Member States, in breach of EU competition rules".

An investigation by the European Commission found that the food company breached EU competition rules by: "Engaging in anticompetitive agreements or concerted practices aimed at restricting cross-border trade of various chocolate, biscuit and coffee products, and by abusing its dominant position in certain national markets for the sale of chocolate tablets."

The investigation found that Mondelēz engaged in 22 'anticompetitive agreements' in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU).

The Commission ruled that Mondelēz was in breach by: "Limiting the territories or customers to which seven wholesale customers (traders/'brokers') could resell Mondelēz products.

"One agreement also included a provision ordering Mondelēz customers to apply higher prices for exports compared to domestic sales. These agreements and concerted practices took place between 2012 and 2019 and covered all EU markets."

It also breached the rules by "preventing ten exclusive distributors active in certain Member States from replying to sale requests from customers located in other Member States without prior permission from Mondelēz".

"These agreements and practices took place between 2006 and 2020 and covered all the EU markets."

The investigation also found that the food company had 'abused its dominant position' by breaching Article 102 of the TFEU between 2015 and 2019.

Mondelēz did this by: "Refusing to supply a broker in Germany to prevent the resale of chocolate tablet products in the territories of Austria, Belgium, Bulgaria and Romania where prices were higher."

And: "Ceasing the supply of chocolate tablet products in the Netherlands to prevent them from being imported into Belgium, where Mondelēz was selling these products at higher prices."

The European Commission concluded that:"Mondelēz's illegal practices prevented retailers from being able to freely source products in Member States with lower prices and artificially partitioned the internal market.

"Mondelēz' aim was to avoid that cross-border trade would lead to price decreases in countries with higher prices. Such illegal practices allowed Mondelēz to continue charging more for its own products, to the ultimate detriment of consumers in the EU."

Executive vice-president of the European Commission, Margrethe Vestager, is in charge of competition policy, and said: "Prices for food differ between Member States. Trade over borders of Member States in the internal market can lower prices and increase the availability of products for consumers.

"This is especially important in times of high inflation. In today’s decision, we find that Mondelēz illegally limited cross-border sales across the EU. Mondelez did so to maintain higher prices for its products to the detriment of consumers.

"We have therefore fined Mondelēz €337.5 million."