Thursday, 25 July 2024

European Union fines Mondelez $366 million


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European Union imposed a fine of 337.5 million euros ($366 million) on the American candy giant Mondelez International, which produces a number of the most famous brands in the world, such as Cadbury, Oreo, and Toblerone.

According to CNN, Mondelez – formerly known as Kraft – is one of the largest candy producers in the world. Its activities extend to more than 80 countries and employ more than 90,000 people, while its net profits in 2023 amounted to about $36 billion, according to the company’s website.

What is the reason for this heavy fine?

European Commission President for Competition Affairs Margrethe Vestager said in a statement on Thursday that Mondelez had carried out illegal practices to obstruct the passage of its biscuits, chocolate and coffee products across borders between European countries, with the aim of selling these products at higher prices in some countries.

During a press conference, Vestager criticized these practices, noting that they come at a time when European citizens are suffering from record high prices, and many of them are facing a real crisis to afford the cost of living.

The roots of the case go back to 2019, when the Commission monitored practices indicating that Mondelez deliberately obstructed the transit of its products between European countries and exploited its “dominant position” in some local markets on the Old Continent to promote some of its own types of chocolate. Therefore, I have decided to launch a formal investigation into the matter in 2021.

For example, the company deliberately stopped selling its products in the Netherlands to prevent their export to Belgium, in order to sell them in the Belgian market at higher prices than the rest of the neighboring markets.

The Commission believes that these practices deprived retailers in some European countries of their right to purchase Mondelez products at fair prices similar to other markets.

In another incident, the company refused to supply its products to wholesalers in Germany to prevent their resale to Austria, Belgium, Bulgaria and Romania, so that it could sell the products at higher prices in those countries.

In another violation of fair competition practices, the company demanded that one of its customers pay higher prices for the products that it would export compared to those that would be sold exclusively in the local market.

For its part, a Mondelez International spokesman said that the latest fine is related to “individual incidents,” which the company had already stopped before the commission’s investigation began, stressing the company’s commitment to improving its compliance with regulatory legislation.