Mondelēz International under investigation: What is parallel trade?

In 2021, the EU raised concerns about US company Mondelēz International allegedly blocking cross-border trade, opening an anti-trust investigation. The investigation is into whether the confectionery major had been trying to restrict so-called ‘parallel trade’, whereby products can be sold for lower prices as they have been brought in from countries where they cost less.

The EU has, reported British newspaper the Financial Times​, now found against Mondelēz and is planning to sue them for a significant amount of money. The EU, it reports, will order Mondelēz to stop blocking cross-border trading, as this has the potential to harm consumers at a time when inflation is high.

What is the investigation about?

“The investigation concerned allegations that Mondelēz restricted competition in a range of national markets for chocolate, biscuits and coffee by hindering cross-border of these products between EU Member States,” Kate Newman, partner and head of competition at law firm Mills & Reeve, told FoodNavigator. Newman stressed that she is not involved in the investigation and only has access to publicly available information.

“Publicly available information indicates that the European Commission has scrutinised whether Mondelēz has ‘carved up’ the Single Market through unilateral practices, as well as through agreements.”

Restrictions on parallel trade are one of the main concerns behind the investigation. “‘Parallel trade’ is where trade in products takes place outside the official distribution system set up by a particular firm; i.e. parallel traders buy products in countries where they are sold at lower prices and sell them in high-price countries. The flow of products thereby created is called parallel trade.  Parallel trade is a lawful form of trade in goods between Member States based on the principle of the free movement of goods within the internal market,” Jessica Burt, food lawyer at Mills & Reeve, explained. Burt also stressed she is not involved in the investigation.