Territorial supply constraints: Why the EU is moving from antitrust enforcement to ex ante tools

Territorial supply constraints (“TSCs”) are rapidly moving up the EU policy agenda. In its 2025 Single Market Strategy (link), the European Commission (“Commission”) identifies TSCs as a persistent Single Market barrier and links them to price differentials across the EU internal market in everyday consumer goods, particularly in grocery and fast-moving consumer goods (“FMCG”). TSCs can take various forms, including:

• contractual clauses from manufacturers restricting cross-border supplies;

• practices that steer retailers to national distributors;

• differentiated labelling or packaging that effectively blocks sales across borders;

• other commercial arrangements that make intra-EU sourcing impractical.

Competition law enforcement of such restrictions on parallel or free trade has not stood still: where the legal and evidentiary thresholds are met, the Commission continues to pursue market-partitioning conduct under Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”), including through its 2024 decision imposing a €337.5 million fine on Mondelēz (link). 

However, EU competition law tools cannot address unilateral conduct by non-dominant companies that is aimed at or results in internal market barriers or territorial constraints. The EU is therefore considering whether an ex ante tool is needed for cases that fall outside traditional competition law enforcement.

Territorial supply constraints: what are they, and why do they matter?

TSCs are typically unilateral restrictions set by suppliers or manufacturers that make it difficult or impossible for retailers or wholesalers to purchase products in one Member State and resell them in another. This can keep national markets separate and limits opportunities to take advantage of price differences across borders (so-called “cross-border arbitrage”). The Commission’s Single Market Strategy identifies TSCs as a contributor to day-to-day price differences between Member States. 

Because TCSs involve contractual restrictions on the territory into which goods can be sold, they are seen as a form of market division.

TSCs can be direct or indirect. Direct TSCs are a direct limitation on supply, i.e. a refusal, a quantitative restriction or a geographical restriction. An indirect TSC is a measure which is not in itself a TSC, but which could accompany a TSC to help achieve its aim, e.g., differentiation in packaging or differentiation in the content of goods.

In practice, TSC issues often arise in the context of routine commercial decisions. The most sensitive scenarios typically involve supply allocation and pricing structures, including: refusals or limitations of supply; differentiated trade terms (such as delivery points and payment conditions); and discount policies that make cross-border resale commercially unattractive. As a result, enforcement can be challenging in this area. Many forms of differentiation are legitimate and may be justified by objective factors, including distribution and fulfillment constraints, documented credit or payment risk, or Member State-specific packaging and labelling requirements. The challenge for authorities is to distinguish these legitimate forms of restrictions from similar measures that serve to partition national markets.

The enforcement gap: why this is not simply an Article 101 TFEU issue

The Commission has been notably explicit about the existence of an ‘enforcement gap’. Broadly speaking, EU competition law provides routes to intervention where: (i) there is an agreement or concerted practice restricting competition (Article 101 TFEU), or (ii) a dominant undertaking engages in exclusionary or exploitative conduct amounting to abuse (Article 102 TFEU).

However, the Commission considers that a significant number of TSC scenarios may fall outside these categories, particularly where conduct is unilateral, but the supplier is not dominant, or where it is difficult to establish the requisite “agreement/concerted practice” element under Article 101 TFEU. The Single Market Strategy therefore signals that the Commission is developing additional tools to address situations ‘beyond those captured by competition law, including unilateral practices by large manufacturers’.

This shift in framing is significant. It moves the discussion away from the familiar question of whether a particular arrangement is a restriction by object or effect under Article 101 TFEU, towards a policy design question: should the EU introduce an ex ante regime targeted at “unjustified” market segmentation in daily consumer goods, and if so, how can it be designed to remain proportionate and legally coherent alongside existing antitrust rules? It also marks a shift from ex post enforcement to ex ante regulation consistent with regulatory developments, but moves away from the traditional approach of intervening only after competition has been restricted or hampered. 

Policy momentum and timeline

a) Before the Single Market Strategy

Before the 2025 Single Market Strategy, the Commission commissioned a study in 2020 on TSCs in the EU retail sector (link). The Study provides a practical overview of the main types of constraints reported in the supply chain and how they can limit cross-border sourcing and resale. The study also estimates that the elimination of TSCs would result in savings of €14 billion for EU consumers.

In 2023, the European Central Bank ("ECB") also identified a “border effect” in grocery retail prices, suggesting that, absent regulation, cross-border frictions and market segmentation will remain relevant in practice (link).

In 2024, the Letta Report on the future of the Single Market (link), prepared at the request of the European Council, places TSCs on the “Single Market for consumers” agenda and describes them as practices that prevent retailers/wholesalers from sourcing freely across the Single Market. The report also highlights the underlying policy dilemma in fairly direct terms: should the EU intervene when a market malfunctions for reasons that are not covered by competition law? The report’s concrete suggestion is to strengthen national authorities’ ability to tackle suspected TSCs through a formal procedure common to cross-border cases, i.e. something more operational than pure case-by-case antitrust litigation.

The call for action on TCSs was also supported by a group of eight Member States (Austria, Belgium, Czechia, Croatia, Greece, Luxembourg, the Netherlands and Slovenia) called for an EU-level approach to TSCs, arguing that competition law enforcement can be slow and case-specific and that an ex ante approach could shift the burden and produce more scalable outcomes (link).

Similarly, in 2025, the European Parliament Research Service (“EPRS”, link) characterises TSCs as persistent single market barriers that competition law can only address partially, given the inherent limits of Articles 101 and 102 TFEU (agreement/dominance thresholds). The briefing explicitly points to a familiar regulatory pattern: issues can remain under-enforced via competition law until they are picked up through internal market legislation, drawing an analogy with how the EU moved from antitrust “partial fixes” to sector-specific rules on unfair trading practices in the food chain.

b) Single Market Strategy (2025): commitment to “develop tools” 

On 21 May 2025, the Commission published its Single Market Strategy, announcing plans to develop tools to address “unjustified” TSCs, with a legislative proposal planned for Q4 2026. The Strategy frames TSCs as a consumer-facing barrier, linked to persistent price differentials and reduced cross-border sourcing (link).

Pressure from Member States also mounted when the same group of eight Member States circulated a Council non-paper calling for faster progress, signalling that a Q4 2026 proposal would be too slow given the political salience of the issue and perceived consumer impact, especially in smaller Member States, which they claimed are directly confronted with excessive prices caused by unjustified TSCs (link). 

c) Context in the Benelux

The Benelux countries have also separately advocated stronger action, calling for European legislation against territorial supply restrictions and linking the issue to the Strategy’s broader agenda of removing priority Single Market barriers (link).

This follows specific developments in the Netherlands, where the Dutch Authority for Consumers and Markets (“ACM”) in September 2025 launched a market investigation into grocery prices in Dutch supermarkets, focusing on price formation and margins and explicitly including comparisons with prices abroad. The ACM expects to publish its findings in the summer of 2026.

Belgium has similarly kept supermarket prices under close scrutiny for several years. The Belgian Competition Authority (“BCA”) has conducted multiple studies examining price levels and trends in the retail sector, including comparative analyses with neighbouring countries. Most recently, in January 2024, the BCA published a working study based on Euromonitor Passport data covering the period 2013-2022, which found that average retailer selling prices in Belgium had been increasing less rapidly than in the Netherlands, France and Germany over the 2018-2022 period—a trend the BCA attributed at least in part to increased competition in the Belgian retail sector (link). The study also noted, however, that for certain industries, differences in manufacturer selling prices to Belgium's disadvantage appear persistent. Accordingly, TSCs, in particular price differentiation, which the BCA considers to typically to fall to the disadvantage of relatively small countries such as Belgium, remain on the BCA’s policy agenda.

Enforcement: what antitrust can do (and why the ex ante debate persists)

Mondelēz 

In May 2024, the Commission fined Mondelēz €337.5 million for hindering cross-border trade in products including chocolate, biscuits and coffee within the EU (link). The decision is notable because it does not rest on Article 101 TFEU alone: the Commission relied on both (i) anticompetitive agreements/concerted practices and (ii) Article 102 abuse of dominance for certain conduct.

The Mondelēz decision confirms that the Commission will pursue market-partitioning conduct under existing rules where evidentiary and legal thresholds are met. At the same time, it does not remove the policy driver behind ex ante tools, namely the residual category of practices that may impede cross-border trade but fall outside effective enforcement under Articles 101 and 102 TFEU.

AB InBev as a reminder: dominance remains a decisive threshold

The AB InBev decision illustrates the other side of the same coin. Article 102 TFEU can address territorial partitioning, but only where dominance is established (link). The Commission found that AB InBev engaged in abusive conduct restricting cross-border trade between the Netherlands and Belgium in circumstances where it held a dominant position. This illustrates why the current policy debate focuses on the “large but non-dominant” category: it sits at the intersection of significant market impact and limited antitrust reach.

What new tools could look like 

What the Commission has committed to (and what remains open)

The Commission has framed the prospective regulatory tool as targeting unjustified TSCs by significant market players with detriment to consumer interests, particularly where price differences in different Member States cannot be explained by objective factors. The Strategy does not set out a final legal test or enforcement model. Its emphasis on developing tools and consultation suggests that key concepts, such as “unjustified” constraints and acceptable objective justifications, remain open and will be shaped through the policy process.

A pathway pushed by Member States: B2B anti-discrimination rules

The eight Member States’ initiative frames one plausible route as an ex ante, B2B-style prohibition on territorial discrimination based on place of establishment (and/or destination), with a burden-shifting logic intended to reduce dependence on slow, case-specific antitrust enforcement. This is not yet a fully developed legislative blueprint. However, it does indicate the direction of travel: moving from a model centred on ex post infringement findings towards a more standardised rule-and-justification framework to prevent intra-market territorial restrictions that could be enforced more predictably.

What the Council non-paper adds (urgency more than design)

The Council non-paper circulated by the group of eight smaller Member States adds urgency and political prioritisation but does not settle the core design choices. It is therefore unsurprising that the debate is now concentrating on the issues that will determine whether the toolbox is workable in practice: scope, thresholds, evidentiary standards, and enforcement allocation between the EU and national levels. The non-paper suggests using the ongoing revision of the Unfair Trading Practices Directive (EU) 2019/633 (“UTPD”) to identify additional harmful unjustified supply restrictions that are not currently captured by the legal provisions of the UTPD, rather than devising entirely new legislation, in order to proceed more swiftly.

The design questions that will determine whether the toolbox works

From a business perspective, the central issue is not merely whether a revision of existing legislation or the design of a new tool will be proposed, but what the tool will require in day-to-day commercial practice. Five issues will be decisive:

1. Scope and definitions: Will the instrument focus narrowly on grocery/FMCG, and how will those categories be delineated?
2. Thresholds: What qualifies an undertaking as a “significant market player” (turnover, market shares, buyer power, or sector-specific criteria)?
3. Justification framework: Which objective reasons will be recognised (logistics and delivery constraints, credit risk, regulatory requirements, product safety, packaging requirements, launch strategies)?
4. Evidence and burden of proof: Will enforcement focus primarily on effects (price differentials not explained by objective factors) or on intent, and what measures will undertakings be expected to take to demonstrate justification?

5. Enforcement model: How will EU-level and national enforcement interact, and how will the regime be aligned with DG COMP’s antitrust enforcement to avoid inconsistent standards?

    

What this means in practice

• For suppliers: review whether any supply allocation or discount mechanisms could be characterized as export-deterrence, even if unintentional. Where differentiation is unavoidable, document the objective reason contemporaneously (logistics, credit risk, compliance constraints).

• For buyers: where cross-border sourcing becomes difficult, document the pattern and not just isolated incidents. Record what changed, when, and in response to what. This is typically what matters in fact-intensive cases.

   

What to watch next

The Commission’s timetable points to a legislative proposal in Q4 2026, although Member States pressure suggests political preference for faster action. In the coming months, the most meaningful signals will be whether the Commission moves quickly into a consultation and call for evidence phase, and how it frames three core parameters: (i) scope (grocery/FMCG), (ii) the “unjustified” test and objective justification framework, and (iii) the allocation of enforcement responsibilities between EU and national authorities.

For more information or further guidance in this area, please contact Pauline Kuipers, Baptist Vleeshouwers and Tialda Beetstra. A special thanks to Juliette Tiel Groenestege for her contribution to this article.

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