WONKA: A Competition Lawyer’s Review

WONKA: A Competition Lawyer’s Review

Dive into the chocolate river of the latest Wonka movie, where Timothée Chalamet dons the iconic top hat, and find yourself not just in a world of pure imagination but in the exciting world of regulatory law!  This prequel to Roald Dahl’s “Charlie and the Chocolate Factory” has proved to be a huge box office success.  It delivers a charming and magical viewing experience for all the family to enjoy, but with a contemporary twist serving up the triple bitter truths of consumer rights, cartels and abuse of dominance: the perfect recipe for a competition lawyer’s review… 

*Warning plot spoilers ahead *

Mrs Scrubitt’s Contract: A Sticky Situation

In a plot twist that’s more sour than sweet, Wonka finds himself entangled in a contract fraught with extortionate rates and terms.  Mrs Scrubitt’s contract requires customers to toil away in the laundry to pay off a mountain of debt – through terms about as transparent as a chocolate teapot.  This scenario is a classic case of unfair consumer practices where the devil is in the details, or in this case, the fine print.  

Whilst not enough to be unfair on its own, excessively small font size can render a contract not “transparent” which can reinforce the unfairness of any unfair terms. 

A consumer contract is not unfair simply because the price is higher than market rate., The grossly excessive costs, however, associated with staying at Mrs Scrubitt’s Inn, set at such an unaffordable level in order to entrap the consumer into a lifetime of servitude, and being insufficiently brought to the consumer’s attention, would obviously be unfair. Likewise, the requirement to be imprisoned in the laundrette until the huge debt is repaid would (at the very least) be unfair (not to mention also likely in breach of modern slavery and human rights laws).   

It’s a stark reminder that in the confectionery world of Wonka, not everything is as sweet as it seems, highlighting the need for transparency and fairness in consumer contracts. 

The UK’s competition and consumer rights regulator, the Competition and Markets Authority (CMA), does not currently have the ability to impose financial penalties on firms engaging in unfair consumer selling practices. That is set to change dramatically later this year when the Digital Markets, Competition and Consumers (DMCC) Bill comes into force.  The reform introduced by the DMCC Bill will give the CMA serious powers when it comes to enforcing consumer rights legislation against unscrupulous traders like Mrs Scrubitt, including the ability to issue fines of up to 10% annual global turnover.

The Oompa-Loompas and cocoa beans supply

Hugh Grant’s character, “Lofty” (probably Hugh Grant’s best role yet) complains to Wonka about him taking cocoa beans from Loompaland and alludes to the scarcity of this raw ingredient, the primary material in chocolate production.   

We know that Wonka later goes on to staff his chocolate factory with Oompa-Loompas and that they are said to be paid in cocoa beans.  While innovative, given what we now know about the scarcity of cocoa beans in Wonka’s world, this renumeration strategy could suggest Wonka goes on to have an exclusive supply of cocoa beans within the relevant geographic market concerned (i.e. where he is the sole or main buyer of cocoa beans within that geographic market) which could be anti-competitive or an abuse of dominance, depending on Wonka’s market share and the duration of the exclusivity at any given time.

The Chocolate Cartel: Bitter Rivals and Sweet Deals

Enter the “chocolate cartel”, led by none other than Slugworth, a character as dubious as a fifty-pound note made of toffee.  This cartel, operating in the shadows of the candy-coated world, presents a humorous but suitably unrealistic and caricatured depiction of anti-competitive behaviour and collusion. 

The plot sees Slugworth and the other two main chocolate makers collude to prevent new entrants, in this case Wonka, from entering the market.  The movie sees the chocolate cartel employing such dastardly tactics as poisoning Wonka’s chocolates ahead of his store’s grand opening, kidnapping and imprisoning Wonka and finally attempting to drown him in a tank of liquid chocolate.    I can’t say we’ve ever seen similar tactics in real cartel cases.

More familiar collusive tactics might see the chocolate cartel seeking to gain Wonka’s agreement to sell his chocolates at the same prices as each of the cartel participant’s chocolates or allocating geographic territories or customer groups between them.  However, the chocolate cartel’s tactics are aimed more at excluding Wonka from the market rather than at seeking to collude with him.

 As such, the conduct bears more resemblance to the exclusionary tactics employed by a dominant firm or dominant collective seeking to exclude rivals.   Although an agreement between Slugworth and the other chocolate cartelists to employ tactics to exclude Wonka from the market would constitute both an anti-competitive agreement, and (assuming the chocolate cartelists hold a high enough combined market share e.g. above 40%) abuse of collective dominance. 

More familiar exclusionary tactics (as opposed to attempting to drown a rival in liquid chocolate), might see the chocolate cartel charging ultra-low prices for their products (deliberately set at a level at which Wonka cannot afford to compete), forcing him to exit the market, known as “predatory pricing”. 

Whatever the form of the collusive or exclusionary tactics, in the UK, the chocolate cartelists would face significant fines of up to 10% global turnover.  Individual sanctions could include prosecution under the cartel offence (attracting a custodial sentence of up to five years) or being disqualified from holding the position of a director for up to ten years.  

This bitter alliance underlines the issues of cartels and abuse of collective dominance, where the only thing melting faster than chocolate in the sun is the foundation of a fair market.  Instead of seeking to stamp out Wonka’s innovation in the chocolate market, the chocolate cartelists would be well advised to independently work on their own innovation, prices and service to seek to fairly compete with Wonka. 

Concluding Crumbs

In the end, whether you’re a fan of the film or a stickler for competition law, one thing is certain: the new Wonka movie provides food for thought, or rather, candy for contemplation, proving that even in a world of pure imagination, the law is never far behind.  So, as you lose yourself in the magic world of Wonka’s factory, remember that even in a world built on dreams, the ground beneath is paved with legal realities – from Mrs Scrubitt’s ensnaring contract to the shadowy dealings of the chocolate cartel.

But regulatory law aside, Timothée Chalamet manages to capture something of Gene Wilder’s original portrayal of Wonka in his charming and accomplished performance of a young Wonka.  Both my three year old and seven year old thoroughly enjoyed the movie, as did I… along with pondering the novel legal scenarios!