European retailers are keeping a cold eye on freezers in Ireland as ice cream battle hots up

A DISPUTE over the way ice cream is sold in the Irish market has broken out again between HB, the market leader, and Mars.

The company which sells Mars products in Ireland has complained to the European Commission that a deal to open up the ice cream market to competition has not been adhered to by Unilever, which sells the leading HB brand. The Commission is likely to issue a statement on the issue shortly, but Unilever is arguing that it has complied with the terms of the deal.

The renewed argument about Unilever's dominance of the Irish ice cream market has surfaced as an appeal taken by Master Foods, the company which sells Mars in Ireland, against a High Court decision on the issue, comes before the Supreme Court.

The High Court ruled in favour of HB's policy of only allowing retailers to stock its ice cream in its cabinets, but Mars is now appealing this decision in a case due to come before the Supreme Court on Thursday.

The "ice cream war" between HB and Mars go back to the early 1990, when Mars launched its ice cream products. Shortly afterwards HB got an injunction to stop Mars putting its products in HB freezers.

While the High Court supported this practice, the European Commission took the view that some of the practices were anti competitive.

In response, Unilever said last year that it would make a number of changes in the marketing of HB. These included the introduction of a differential pricing system.

The Commission had objected to a flat charge covering both the product and the provision of the freezer.

Another change included the sale of freezers to some retailers and the introduction of a hire purchase agreement to help fund such purchases.

A Unilever spokesman said yesterday that - it had fully complied with this agreement and pointed out that 1,750 freezers had already been sold to retailers.

However, Mars is understood to be arguing that Unilever has not done enough to open the market to competition and is continuing to abuse its dominant position in the market.

The Commission said last year that the commitments by Unilever appeared "at first view to be enough to allow it to grant an exemption to EU rules barring anti competitive practices.

However, the Commission which would make no comment yesterday - is now expected to issue a new "statement of objection" on the issue shortly, which is expected to say that not enough has been done to open up the Irish market. One of the options open to Unilever would be to appeal to the European Court of Justice.

The row relates to what is known in the trade as "impulse" ice cream purchases, thought to account for about 80 per cent of the £60 million Irish ice cream market.

The case is being closely watched across Europe as it is being seen as a key test case in the £15 billion European ice cream market and for competition policy in general.