Competition and trade law: Commission decision against Unilever

United Kingdom
The European Commission has adopted a decision against Unilever's practice of "freezer exclusivity" in Ireland. The decision relates to Unilever's policy of supplying freezer cabinets to retailers with no direct charge but subject to the condition that the cabinets are used exclusively for the storage of Unilever's products.

The case originated with a complaint made by Mars in 1991. The Commission raised objections to Unilever who responded by modifying its arrangements so that retailers had the option to hire purchase freezer cabinets from Unilever and therefore eventually own the freezer cabinets and offer the products of any supplier. However, in 1997, the Commission raised a new set of objections because market research showed that these new arrangements did not succeed in opening up competition. The Commission decision found that many of the outlets which were provided with cabinets were only in a position to offer for sale the ice-cream products of Unilever. Research showed that retailers were unlikely to replace the cabinets or to install additional cabinets.

The Commission has decided that the exclusivity condition infringes Article 85 of the EC Treaty for outlets whose only ice-cream cabinets are provided by Unilever because of its restriction on competition in the 'impulse' ice-cream market in a very substantial portion of retail outlets in Ireland.. The Commission has also found that by inducing retailers to enter into exclusive arrangements, the company was abusing its position of market dominance in Ireland where it has a market share in excess of 85%, thus infringing Article 86 of the EC Treaty.