Equities

EU Fines Mondelez €337.5M for Antitrust Violations on Cross-Border Sales

EU fines Mondelez €337.5 million for antitrust violations, hindering cross-border sales from 2012 to 2020.

By Mackenzie Crow

5/23, 05:33 EDT
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Key Takeaway

  • Mondelez International fined €337.5 million by the EU for antitrust violations, including limiting cross-border sales and maintaining higher prices.
  • The European Commission found Mondelez's practices hindered parallel trade within the EU, impacting consumer prices from 2012 to 2020.
  • Merck KGaA’s subsidiary MilliporeSigma avoided charges in a separate case due to proactive cooperation with DOJ on export control violations.

Mondelez Fined for Antitrust Violations

Mondelez International Inc., the US-based maker of popular brands such as Côte d’Or chocolate, Ritz crackers, and Oreo cookies, has been fined €337.5 million ($366 million) by the European Union for antitrust violations. The EU's antitrust watchdogs accused Mondelez of engaging in anticompetitive agreements with distributors to carve up markets and keep prices higher.

The European Commission's investigation, which began in 2021, focused on whether Mondelez's distribution practices hindered trade flows within the EU, ultimately leading to higher prices by obstructing sales between EU nations. The Commission found that from 2012 to 2019, Mondelez limited the territories in which wholesale customers could resell their products. Additionally, between 2006 and 2020, the company prevented distributors from responding to sales requests from other EU countries.

“Trade over borders of Member States in the internal market can lower prices and increase the availability of products for consumers,” said Margrethe Vestager, the EU’s competition chief. “This is especially important in times of high inflation.”

Mondelez also faced accusations of abusing its market dominance between 2015 and 2019 by refusing to supply a broker in Germany with products to be resold in other EU nations and stopping the supply of chocolate in the Netherlands to prevent imports into Belgium, where prices were higher. These actions breached the EU's rules against anticompetitive agreements, according to the EU’s antitrust authority.

Impact on Parallel Trade

The EU's decision highlights the importance of parallel trade, where re-sellers of branded goods source their supplies where they are cheapest and sell them elsewhere in the EU’s single market. Efforts by brand owners to frustrate this practice have often led to clashes with competition authorities.

The European Commission's findings indicate that Mondelez's actions hindered this parallel trade, leading to higher prices for consumers. The company’s practices of limiting territories and preventing cross-border sales requests were seen as direct attempts to carve up markets and maintain higher prices.

The EU's decision can be appealed to the bloc’s General Court in Luxembourg, providing Mondelez with an opportunity to contest the fine and the findings of the investigation.

Merck KGaA Subsidiary Avoids Charges

In a separate case, the US Department of Justice (DOJ) announced that it would not bring charges against Merck KGaA’s North American unit, MilliporeSigma, after the company proactively disclosed information about a scheme to export sensitive biochemicals to China. Two men, including a former employee of MilliporeSigma, pleaded guilty to wire fraud conspiracy charges related to the scheme.

Pen Yu, a U.S. citizen residing in Florida, fraudulently procured deeply discounted biochemicals from MilliporeSigma over nearly eight years, with the help of Gregory Muñoz, a MilliporeSigma sales representative. Yu obtained more than $4.9 million in discounts and other benefits by falsely representing that he was affiliated with a biology research laboratory at a Florida university. The biochemicals, which included chemical compounds subject to U.S. export controls regulations, were then repackaged and sent to China.

The scheme was eventually caught by MilliporeSigma’s compliance personnel, who noticed suspicious orders. The DOJ credited the company for its “exceptional and proactive cooperation” and for disclosing the misconduct only a week after its discovery.

“DOJ’s favorable resolution of this matter with MilliporeSigma reflects our company values and steadfast commitment to a strong culture of compliance that protects our customers, employees, and business,” a MilliporeSigma spokeswoman said in a statement.

Management Quotes

  • Margrethe Vestager, EU Competition Chief:

    "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."