Ice-cream suppliers face clampdown
Friday 07 May 1999
In a letter sent to the main players in the pounds 600m industry, which is dominated by Wall's, a subsidiary of Unilever, Mars and Nestle, the Commission said that it had identified both scale monopolies and complex monopolies, where a number of companies operate together to distort competition.
However, the Commission said it had not reached any conclusion on whether these operated against the public interest and it invited comments from interested parties such as manufacturers, distributors, retailers and consumers.
The nine-month inquiry into the "impulse" ice-cream market - ice-creams bought from corner shops for immediate consumption - follows an Monopolies and Mergers Commission report last year which found that Wall's wholesaling practices were anti-competitive.
This latest investigation has established that a monopoly situation exists in favour of Wall's, which has an estimated 37 per cent of the market. It has also identified a number of complex monopolies in favour of certain manufacturers including:
n The supply of freezers on terms which prevent retailers from stocking rival brands
n The use of volume-related bonuses to encourage retailers to buy from particular suppliers
n Supply agreements which prevent retailers stocking rival brands
n The recommending of retail prices.
The Commission said that matters for further investigation included the operation of Birds Eye Wall's new sales and distribution network, Wall's Direct. This was launched in March following last year's MMC report and enables retailers to buy from 200 wholesalers and distributors who are not part of Wall's Direct. Companies that provide sales and distribution services to Wall's Direct can also provide the same services to other ice-cream manufacturers.
This is the fourth inquiry into the ice-cream industry in the last 20 years. The last time the MMC investigated freezer exclusivity in 1994 it ruled that the practice was not against the public interest although the European Commission has ruled it breaches EU competition law.
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