European Union ministers are set to urge Brussels on Friday to intensify actions against multinational companies that impose significant price discrepancies on retailers for identical branded products like chocolate and biscuits. This practice costs consumers an estimated €14 billion annually.
A coalition of eight governments plans to submit a proposal to the European Commission, advocating for stricter single-market regulations to eliminate effective prohibitions on parallel trading. This trading allows retailers to buy products at lower prices from other member states.
On Thursday, the Commission fined Mondelez, the manufacturer of Toblerone and Philadelphia cheese, €337.5 million for preventing wholesalers from purchasing products such as biscuits, chocolate, and coffee in one member state to sell in another where prices are higher. Margrethe Vestager, the competition commissioner, stated, “It’s illegal,” referring to these restrictive practices.
Governments and retailers argue that such practices are widespread across Europe’s single market, which is designed to eliminate trade barriers within the union.
Countries including Belgium, Croatia, Denmark, and Greece support a proposal from the Netherlands to abolish “territorial supply constraints” (TSCs). The proposal highlights the existence of varying prices within the EU for identical products.
The coalition seeks an explicit ban on contracts with such conditions and proposes replacing lengthy local language labels with QR codes directing customers to a website in their language.
Competition investigations, such as the one involving Mondelez, are often prolonged and depend on reluctant wholesalers and retailers for evidence.
“If you try to buy branded goods from another country, the producer will cut off your supply. And some big brands you have to stock,” said an anonymous retail executive.
Research by the Dutch government revealed that TSCs affect 1 in 25 products, leading to prices averaging 10 percent higher than in the cheapest markets. A 2020 European Commission study of 16 member states estimated that TSCs cost consumers €14.1 billion annually.
Micky Adriaansens, the Netherlands’ economy minister, emphasized, “Removing trade barriers should be a key priority for the single market. This helps in keeping consumer retail prices for food and non-food products fair, especially in times of high consumer prices.”
The eight member states are proposing a concrete path forward towards an EU-wide ban on TSCs by amending existing or introducing new EU rules or instruments.
When asked about the necessity of new rules, Vestager responded, “It’s illegal to prevent traders from buying in one member state and selling in another.” She expressed hope that the Mondelez case would serve as a deterrent and noted that more cases are under investigation.
Ursula von der Leyen, Commission president, has identified improving the single market and enhancing business competitiveness as priorities for her potential second term, pending reappointment after the June elections.
Enrico Letta, former Italian prime minister, highlighted the issue of buying restrictions in his report on the future of the single market. Separately, Greek Prime Minister Kyriakos Mitsotakis, a key figure in Von der Leyen’s European People’s Party, has urged her to take action.
In a letter seen by the Financial Times, Mitsotakis wrote that Greece and other member states face “unreasonably high prices” for branded essential consumer goods compared to other EU countries. He emphasized the importance of demonstrating to voters that the EU can “intervene decisively, swiftly, and effectively to solve these problems.”
He also called for a ban on companies selling the same product under different brand names in different member states.
