Few competition law topics are debated more emotionally in Austria and other Member States than different prices for the same products across the EU. Austria counts itself among the “victims” and is pressing for stricter EU rules. Prompted by several Member States, Austria among them, the Commission is examining tighter legislation and has put four options up for discussion. Yet the existing rules on territorial supply constraints are already strict, as the €337.5m fine the Commission imposed on the food group Mondelez in 2024 shows (AT.40632 – Mondelez, 23 May 2024). So what do companies have to watch out for today? And what may they have to prepare for?
The answer in short: most of what the public debate calls a territorial supply constraint is prohibited under competition law. The supposed regulatory gap is very narrow – purely unilateral conduct by suppliers that are not dominant. Closing that gap with statutory supply obligations would be price regulation, rather than competition law enforcement.
What already applies
Territorial supply constraints are prohibited – subject to one narrow exception. Where a manufacturer appoints a distributor to resell its products, it can restrict the distributor’s resales outside a defined territory only within very narrow limits. The distributor may be prohibited from selling “actively” outside its territory – from approaching customers in another one. Even that is permitted only where a properly constructed exclusive distribution system is in place. Passive sales – selling to a customer from another territory that approached the distributor on its own initiative – can never be prohibited.
Mondelez as an example. In 2024 the Commission fined the US food group Mondelez (Milka, Oreo, Toblerone and many more) €337.5m for 22 anticompetitive agreements and concerted practices. Seven wholesalers were told which territories and customers they could resell to, one of them under an obligation to charge more for exports. Ten exclusive distributors were only allowed to answer requests from customers in other Member States with Mondelez’s prior approval – a restriction of passive sales, which is never permissible. On top came an abuse of dominance: Mondelez refused to supply a German trader to block resales into Austria, Belgium, Bulgaria and Romania, and stopped supplying in the Netherlands to block imports into Belgium. Mondelez cooperated and acknowledged the infringement; the 15% reduction did not materially alter the size of the fine.
Take care how the exclusive distribution system is built. Following the ECJ’s judgment in Beevers Kaas (C-581/23, 8 May 2025), a restriction of active sales is permissible only where an exclusive system has in fact been established. The manufacturer must protect its exclusive distributor in one country against active sales from all of its other distributors elsewhere, and the other distributors’ agreement to that must be capable of proof. An exclusive distribution system with gaps therefore carries considerable risk of its own.
The economic logic behind the rules. Behind this seemingly complex regime, which differentiates active from passive sales, lies a balancing of interests. On one side sits the consumer interest in buying cheaply, which the internal market is meant to deliver. On the other side is a legitimate interest of manufacturers in differentiating prices to reflect different cost structures – logistics and warehousing costs are typically higher in a mature market because deliveries are more frequent, and the same is true of shelf space, marketing and retail margin. Conversely, a manufacturer may price low on purpose in a market it is still trying to open up or where it pursues a growth strategy. Price differentiation by willingness to pay is not a competition law problem: it allows a target margin to be met while still serving customers who would not buy at an average price. And aligning prices, experience suggests, does not mean the lower price prevails.
Where the existing rules stop
Distribution within a group. Where a manufacturer distributes through its own subsidiaries, the rules on agreements do not apply: there is no agreement between (different) “undertakings” within the meaning of competition law. In this case, the prohibition of abuse of a dominant position (Article 102 TFEU) is the only basis on which to assess the conduct.
Unilateral conduct. Since the ECJ’s judgment in Adalat (C-2/01 P) it has been settled that a non-dominant manufacturer may steer its deliveries unilaterally, through quotas for instance, as long as there is no concurrence of wills with its distributors. Under the case law on pharmaceutical distribution (Sot. Lélos kai Sia, Joined Cases C-468/06 to C-478/06, 16 September 2008), even a dominant supplier is under no duty to supply without limit on the terms of the cheapest Member State. That is the regulatory gap the Commission has in mind.
The legislative proposal
The process at EU level. In Austria, the Minister of Economics among others is calling for an “end to price discrimination” under the banner of the “Austria surcharge”. Austria and seven further Member States (Belgium, Czechia, Croatia, Greece, Luxembourg, the Netherlands and Slovenia) asked the Commission to act, and in spring it launched a call for evidence. Four options are on the table. Self-regulation (Option 1) and guidelines (Option 2) would remain non-binding. Option 3 would introduce stricter rules for suppliers whose distributors are economically dependent on them, similar to an ex-post Article 102 TFEU assessment. Option 4 would be a twin of the Geo-blocking Regulation: a catalogue of practices prohibited ex ante, possibly with a statutory claim to be supplied.
Where Austria stands. The BWB wants the sharpest version and expressly supports Option 4 in its submission. Its reasoning is practical rather than one of competition policy: antitrust proceedings turn on complex questions of fact and law and take years, and it therefore rejects Option 3, which requires relative market power. The BWB considers self-regulation and guidelines (Options 1 and 2) ineffective. It is more appropriate, the authority writes, to adopt “rules which explicitly prohibit certain conduct already ex ante and also target suppliers below the threshold of market dominance”. The Ministry of Economics’ (BMWET) submission is markedly more balanced: Option 4 is, in its view, the most far-reaching variant and could, depending on its design, directly restrict the freedom to set prices – a core principle of free competition. What is needed is a mix of measures, preceded by an impact assessment of what regulation would mean for production sites with higher costs. There can be no EU-wide uniform food price, the Ministry says.
Between the lines: what to take away
The debate about new rules obscures that the existing ones are already strict – and strictly enforced. It also assumes that every price difference between Member States is problematic, an abuse to be stamped out.
Review territorial restrictions and exclusivity. Under the law as it stands, exclusive territories are permissible only within narrow limits – and restrictions of passive sales never are.
Exclusive distribution works only without gaps. Under the ECJ’s judgment in Beevers Kaas, protection of the exclusive distributor against all other distributors in other territories must be agreed in a way that can be proven. Relying on the other distributors not shipping into foreign territories anyway does not suffice.
Day-to-day practice counts more than the (template) contract. Approval requirements for enquiries from abroad, export surcharges, historically grown quotas, or the friendly request to a distributor to stay out of other markets were, in the Mondelez case, precisely the infringement.
Document the reasons for price differences. It is worth documenting why prices differ across territories. Two of the four options (3 and 4) discussed in the legislative process call for a justification of the differentiation – ex ante in a catalogue, or ex post in proceedings. The reasons for price differences may already be relevant in regulatory investigations today.
Follow the legislative process. Anyone wishing to contribute to the public consultation can do so until 4 December 2026. The Commission’s proposal is announced for 2027. We will come back to it once it lands.
Disclosure: This article was written the way we work. The topic, the analysis, the arguments and the final wording are ours. We use AI as a research and drafting tool along the way. The result is meant to speak for itself.