Ice cream wars inquiry 'misled' by Bird's Eye

DAVID HELLIER

Executives of Bird's Eye Wall's, a subsidiary of Unilever, could face criminal prosecution as a result of allegations that they misled the Monopolies and Mergers Commission in the early 1990s in its investigation into the ice cream market.

It is believed that after a nine-month inquiry, John Bridgeman, director general of the Office of Fair Trading, has concluded that a prima facie case exists to pursue the case.

The OFT's report has been sent to the Department of Trade and Industry, which will make a final recommendation on prosecution, according to this week's Economist magazine. If Ian Lang, the Secretary of State for Trade and Industry, approves a prosecution it will be the first such case under the 1973 Fair Trading Act, which has penalties ranging from a fine to a two-year jail sentence.

Unilever, which has a 70 per cent share of the pounds 250m UK market for wrapped ice cream products, said yesterday that it had been informed that the OFT had completed its investigation and that the relevant papers and documents had been passed on to the Department of Trade and Industry.

The allegations that executives had misled the MMC came from Unilever's competitors after the MMC concluded that Unilever's huge share of the ice cream market did not depend on any unfair trading practices.

According to the Economist, the MMC agreed to this conclusion after receiving Bird's Eye's assurances that the firm had not forced retailers to buy supplies only from its distributors, rather than independent wholesalers.

The MMC's report noted that Wall's had explicitly confirmed that "retailers were under no contractual obligation to obtain supplies exclusively from concessionaires" and that it had taken steps to "assure itself" that no pressure was being brought to bear on retailers to buy only from concessionaires.

According to the Economist, the OFT has concluded that these statements were untrue and that the Wall's executives who made them must have known they were untrue.

The MMC agreed to allow the company to continue to apply a condition that shops stock only Wall's brands to its loans of freezer cabinets. But the MMC agreed to this only after receiving the firm's assurances that Wall's had not sought to force retailers to buy supplies only from its distributors, rather than independent wholesalers.

"From discussions our lawyers have had with the OFT, we do not believe that any decision to prosecute has been taken," a Unilever spokesman said yesterday. "The OFT has not given any indication to us or any other party as to what conclusions they may have reached. In the light of this and given that the OFT has made no public statement any suggestion or implication that Birds Eye Walls will be prosecuted is wholly without foundation."

The OFT said it had passed its report to the DTI but would make no further comment.