Outlook: Cold comfort for Mars

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The Independent Online
Unilever and Mars have been waging ice-cream wars for eight years now. Intermittently, the Irish High Court, the Irish Supreme Court, the European Commission, the Office of Fair Trading and the Monopolies and Mergers Commission have been dragged into the fray. Now the European Court of Justice in Luxembourg is about to learn more about the "impulse" ice- cream market and "cabinet exclusivity" than anyone decently ought to know.

The dispute centres around whether corner shops should be allowed to use freezers supplied by Unilever to stock rival brands of ice-cream. To the rest of the world, this might seem an arcane and trifling issue for two such behemoths of the food industry to come to blows over. But when you realise that European ice-cream sales are running at pounds 9bn a year, and that Unilever has a big fat 40 per cent of the market, it is easier to understand why it is applying Magnum force to the argument.

Typically, the Swiss in the shape of Nestle have declared themselves neutral, even though they also ban everyone else's ice lollies from their cabinets, hold a 25 per cent market share and thus have as much vested interest in the outcome as anyone. Unilever insists it has built its market share through hard graft and if Mars really believes the future of the world relies with frozen Bounty bars, then it can fork out for its own freezer cabinets.

Mars retorts that most corner shops have room for only one freezer and since Unilever is the market leader with the biggest range, it is a no- brainer for most shopkeepers. It has chosen Ireland as the battleground because Unilever's market share there is 80 per cent and because the Irish proportionately buy more ice-cream from small shops than anyone else.

Now Karel Van Miert, the European Competition Commissioner, appears to have swallowed the Mars argument and is about to rule against Unilever. That must bode ill for its market dominance not just in Ireland, but throughout Europe. The last time Unilever was rapped over the knuckles for this it agreed to sell off a fifth of its freezers in Ireland only to discover that it could barely give them away. This time round it will appeal, which should eat up another three years, and hope to get away with surrendering more of its tied freezer estate.

A simpler solution might be for each manufacturer to rent space in the other's freezers. That would get Mr Van Miert off the industry's back, save on lawyers' bills and allow consumers a genuine choice of whether they want a Solero or an Opel Fruit ice-cream bar down the inside of the car seat.