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ECJ rules against freezer exclusivity

The European Court of Justice (ECJ) has confirmed decisions by the European Commission and the Court of First Instance (CFI) in the case of Unilever Bestfoods (Ireland) Limited.

Unilever supplied ice creams to retailers, and also lent retailers freezers, free of charge on the condition that they could only be used for Unilever's ice creams. This was challenged by another producer, on the basis that the agreements were contrary to Article 81 of the European Treaty (i.e. they restricted competition) and that Unilever was abusing a dominant position in the market contrary to Article 82 of the Treaty.

That complaint was upheld by the Commission, and appeals against it by Unilever were dismissed by both the CFI and the ECJ, even though the contracts between Unilever and retailers allowed the retailers to stock other producers' ice creams (just in different cabinets). It was found that the effect of the restriction was to inhibit a significant number of retailers from selling other brands of ice cream for a variety of reasons, such as a lack of space for further freezer cabinets.

This case illustrates the difficulty of tying retailers or distributors down with restrictions that do not at first appear to restrict them from selling competing products. A similar decision would be likely under the UK's domestic competition law.