Cadbury owner faces EU antitrust inquiry

Regulators in Brussels have opened a formal antitrust investigation into whether the maker of Cadbury chocolate has restricted competition by hindering the cross-border trade of its products in the EU.

If Mondelez is found guilty of anti-competitive behaviour, the Chicago-based snack maker would be in breach of EU antitrust rules, the European Commission said in a statement.

Margrethe Vestager, the EU’s executive vice-president for competition, said: “Chocolates, biscuits and coffee are products consumed by European citizens daily.

“We are opening a formal investigation to see whether Mondelez, a key producer of these products, might have restricted free competition in the markets . . . leading to higher prices for consumers.”

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The EU said it was worried Mondelez might have restricted trade of its chocolates, biscuits and coffee between EU member states through agreements and unilateral practices.

Regulators are concerned that Mondelez is blocking trade between countries where the prices of products are different. This is called parallel trade.

Investigation

Included in the investigation are possible restrictions on languages used on packaging, deals that potentially undermine the choice of countries a trader can sell to and whether parallel trading has led to an increase in prices or limited volumes for customers across the bloc.

Brussels said the probe would be a matter of “priority”, although the opening of the formal investigation did not prejudge the results.

“We learnt about the European Commission’s announcement that it has opened a formal investigation into Mondelez International’s practices related to the cross-border supply of products within the European Economic Area,” the company said.

“We will work constructively with the European Commission as it conducts its review.”

The Chicago-based group, spun off from Kraft in 2012 before its merger with Heinz, also makes Oreo cookies, Ritz crackers and Alpen cereal.

Two years ago it reached a settlement with the US Commodity Futures Trading Commission over charges that it and Kraft Heinz had manipulated wheat prices.

Mondelez said last year it was seeking to acquire more “healthy” snack brands amid rising global concern over obesity.

Results

Mondelez International beat Wall Street estimates for fourth-quarter revenue and earnings in results announced late on Thursday, boosted by higher demand in developed markets.

Consumers stuck at home under new lockdown restrictions in Europe and North America stocked up on chocolates and snacks during the holiday season, driving sales across the industry which has grown since start of the Covid-19 pandemic.

Quarterly revenue rose nearly 6 per cent in Europe and about 14 per cent in North America, Mondelez’s two largest markets.

Overall, sales rose to $7.3 billion from $6.91 billion a year ago, beating analysts’ average estimate of $7.16 billion.

Excluding exceptional items, the company earned 67 US cents per share, beating analyst expectations of 66 cents per share. – Copyright The Financial Times Limited 2021 / Reuters