The General Superintendent of the Brazilian Administrative Council for Economic Defense (CADE) launched an investigation earlier this week, into allegations that Unilever Brazil and Nestlé Brazil struck agreements with local retailers that hindered competition in the country’s ice cream market.
“Initial findings indicate that the companies may be hampering competition in the ice cream resale market, especially in small shops, such as cafeterias and snack bars,” said a statement issued by CADE on Monday.
Conduct under investigation includes alleged retail exclusivity and publicity priority “in exchange for bonuses.”
An alleged ban on the “storage of competing products inside freezers lent by the companies” is also being probed by CADE.
According to a statement issued by Nestlé Brazil, the allegations date back to 2006.
"Committed to respecting" laws
Responding to the launch of the investigation, both Nestlé Brazil and Unilever denied that the marketing practices they employ violate Brazilian antitrust laws.
“We can confirm knowledge of an investigation by the Economic Defense Administrative Council (CADE),” a spokesperson for Unilever told DairyReporter.com.
“Unilever is fully committed to respecting all applicable laws and it is Unilever’s policy to co-operative fully with the competition authorities.”
Sao Paulo-based Nestlé Brazil also acknowledged that an investigation has been launched into its marketing methods by CADE, but denied the allegations.
“Nestlé Brazil will vigorously defend itself against the alleged charges,” said a statement sent to DairyReporter.com.
“Given that legal proceedings are on-going, we are not able to make any further comments at this time. Nestlé Brazil is fully compliant with market laws and regulations and we will cooperate closely with local authorities for the investigation,” the statement added.
75% market share
Brazilian ice cream sales hit just over R$3.5bn (US$1.62bn, €1.2bn) in 2011, according to a recent market report from global market research firm, Mintel. Nestlé Brazil and Unilever Brazil brands accounted for almost 75% of these sales.
Unilever Brazil, which markets a range of ice cream products under the Kibon brand, controlled a 47.4% share of the country’s ice cream market, while Nestlé Brazil’s share of the Brazilian ice cream market stood at a 27.3%.
Nestlé Brazil and Unilever Brazil have a month to file a defense to the allegations, according to the CADE statement.
Once the investigation has been completed, the General Superintendent of CADE will issue an opinion, either supporting the pursuit of a conviction or the closure of the case. This will then be sent to the CADE Tribunal for final judgment.