Wrigley fined for price fixing

By Peter Stiff

- Last updated on GMT

Related tags: Wrigley, Competition, Marketing, Price

The Romanian Competition Council has fined Wrigley Romania and 26
connected companies €5.5 million for introducing minimum prices on
its products, which was seen to be a measure that is in violation
of EU law.

The Competition Council proved that Wrigley along with 26 other companies that distribute Wrigley products violated competition law by fixing prices when signing distribution agreements.

Wrigley's fine, which represents approximately 10 per cent of the value of the Romanian chewing gum market in 2004, was brought about by an infringement of article five paragraph one of the competition law 21/1996.

This states companies should not impose resale prices either directly through clauses included in distribution contracts or indirectly through discount policies. Allocating markets and clients is also banned.

According to the council, fixing prices and actions taken to divide the client base completely eliminated the competition. This resulted in consumers paying a price that is not affected by the element of supply and demand.

An example of the fixing can be seen with one of Wrigley's trade partners Rodipet, which purchases directly from Wrigley. An agreement was made establishing the retail price in the company's kiosks.

Wrigley is now forbidden from recommending, the sale price of its products including a maximum level, and has been recommended not to make exclusive agreements in the future.

Previously Wrigley had requested an exemption from the competition law regarding both the buying and distribution of its products resulting in a campaign against the company.

Interbrands Marketing and Distribution launched the petition against the confectionery giant in 2004 claiming that Wrigley was in violation of competition law due to its dominant position in the market.

The Competition Council however ruled in its investigation that Wrigley had complied with all the laws regarding the selling and promotion of its products.

Founded in 1891 Wrigley is present in 180 countries worldwide and last year achieved global sales of $4 billion.

Related topics: Manufacturers, Gum

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