HB firm told it can't freeze out Mars ice cream

Mars has won its long-running ice cream war with HB products. The European Commission is about to rule that Unilever, which produces HB goods in Ireland, cannot ban rival ice creams from its shop freezer cabinets.

The move will have major implications for the industry across Europe. The announcement, to be made next week, will mark a victory for Mars, the US confectionery group, in its long-running battle against Unilever, the world's largest ice cream manufacturer.

Mars complained in 1991 that by excluding rival products from its freezer cabinets, the firm was in effect excluding competitors because there was no room for a second freezer in most shops. The Commission first ruled against the practice in 1993 and issued an amended statement of objection last year, telling Unilever to open its freezer cabinets to its competitions. But Unilever which claims that loaning the cabinets to shops allows it to maintain the quality of its products - said it would continue the fight.

Although the Commission ruling applies only to the complaint lodged by Mars about Unilever's activities in Ireland, in practice it would outlaw freezer exclusivity in any other country in the European Union.

Failure by Unilever to comply with the ruling could result in heavy fines. Freezer exclusivity has been judged to be in breach of the EU's founding treaty, which outlaws restrictive agreements and abuses of a dominant position.

In 1995, Unilever narrowly headed off a ruling against it by offering to sell or lease cabinets to retailers. It failed to sell or lease enough freezers to satisfy the Commission.

This time, the Commission was determined to take a hard line with Unilever. "They will have to undo their practices," said one official.

The Anglo-Dutch group sells £3.6 billion of ice cream a year 11 per cent of its sales worldwide. Its sales are more than three times that of Nestle, the number two manufacturer globally.

Analysts believe ice cream accounts for a higher share of Unilever's profits than of turnover, with margins of more than 10 per cent.

Mars says freezer exclusivity has helped Unilever gain more than 80 per cent of the Irish market for wrapped ice cream.