EU court freezes Unilever's monopoly

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Related tags: Ice cream, European union

A European Union court ruling has today forced ice cream
manufacturers to allow rival companies access to their freezer
space. The court rejected Unilever's appeal against a Commission
decision banning it from forcing retailers to stock its own brand
of HB ice cream in freezers offered by the company.

A European Union Court ruling today has forced ice cream manufacturers to allow rival companies access to their freezer space.

The Court of First Instance supported and earlier decision by the European Commission that ice cream manufacturers attempting to force retailers to sell only their own brand of ice cream in the freezers provided free of charge were acting illegally.

Unilever provided free freezers to retailers in Ireland on the condition that the stores used them only for its own HB ice cream. As a result, "it was difficult for other suppliers to penetrate the market",​ the court stated.

The Unilever case started in the late 1980s when US rival Mars launched an ice cream version of its already popular chocolate bar into the Irish impulse market. Impulse ice creams are singularly wrapped so they can be eaten like chocolate bar products.

Mars persuaded some retailers to include its product in Unilever freezers, but Unilever, in an attempt to defend its market share, continued to stop outlets to which it had given freezers from stocking competitors' products.

The Irish courts ruled in 1991 that Mars was taking advantage of the freezer infrastructure that Unilever had created, but Mars appealed to the EU Commission in Brussels, and in 1995 regulators forced Unilever to let retailers buy the freezers in instalments, thus ending the exclusive provisions that Unilever had insisted upon. In 1998, the Commission outlawed Unilever's exclusivity clause altogether.

Today, the Court of First Instance agreed with the Commission's ruling and said that Unilever's policy was against European law because of the market power that the company possessed in Ireland.

"The effect of the exclusivity clause is to cause retailers to act differently towards other brands and thus distorts competition on the market,"​ the judge said.

"The provision by Unilever's Van den Bergh Foods of freezer cabinets without charge to ice cream retailers on conditions that they use them exclusively for the stocking of its ice cream is contrary to community competition,"​the judge concluded.

Related topics: Markets, Unilever

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