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EUOBSERVER/BRUSSELS - The European Court of First Instance ruled today (Thursday 23 October) that the practice whereby consumer goods giant Unilever provides freezers for free to shops in Ireland in exchange for only stocking Unilever products is an abuse of competition law.

The case started when Mars filed a complaint against a Unilever subsidiary called Van den Bergh Foods (formerly HB) to the European Commission in September 1991.

Van den Bergh Foods is the principal manufacturer of ice-cream products in Ireland.

Mars complained that HB was providing freezers free of charge to several retailers on the condition that these freezer cabinets stocked nothing but HB products.

The case was brought in front of the Court of First Instance when Unilever decided to appeal against the European Commission decision of 1998. But the current decision of the European Court backs the Commission's position.

In 1998, the European Commission found that the practice of supplying these freezer cabinets was contrary to EU competition law.

The Commission also found that since many retailers supplied with freezer cabinets by HB did not have sufficient space for other cabinets supplied by other manufacturers, the exclusivity clause was a highly effective way of keeping competitors out of the market.

"The effect of the exclusivity clause is to cause retailers to act differently toward other brands and thus distorts competition on the market", the court said in a statement.

This potentially opens the way to for similar lawsuits over other exclusive freezers practicies, but Unilever says that the case is specific to Ireland and will not change its policies in other countries.

The statement also says that Unilever remains convinced that consumer choice and service are enhanced by the provision of cabinets and that "they do not prevent other manufacturers from entering the market".