Ireland's leading ice cream maker HB has lost a European legal battle against a major American rival.
Judges in Luxembourg ruled that HB Ice Cream, which has nearly 80 per cent of the Irish market, cannot force its retailers to stock only HB products - although the freezers are supplied free of charge by the company itself. HB is a subsidiary of Unilever.
An "exclusivity clause" imposed by HB in exchange for use of the freezers is a breach of EU rules on fair competition, said the European Court of First Instance.
The ice cream war broke out in 1989, when many Irish retailers with HB freezers began to stock and display ice creams from American-owned Mars, which was trying to break into the Irish market.
HB cracked down on those using the freezers to promote other brands, and in 1991 Mars complained to the European Commission about alleged anti-competitive behaviour.
It took the Commission more than six years to announce that HB distribution agreements containing the exclusivity clause were incompatible with EU competition law - prompting HB to take the Commission to court.
The Commission said HB was dominant in the Irish market for "single-wrapped items of impulse ice creams", backed up by the strength of parent company Unilever on other ice cream markets in Ireland. In addition, HB's network of retail agreements effectively restricted retailers' ability to sell competing products.
The judges backed that view today, throwing out HB's case and declaring: "Taking into account the specific conditions of the market, the popularity of HB ice creams, HB's strength on the market and the specific features of the products, the effect of the agreements as a whole is to restrict competition on the market."
The ice cream company has two weeks to appeal, but only on points of law. Legal proceedings are still pending in the Irish courts.
PA