On 9 August 2017 the Competition and Markets Authority (CMA) closed its investigation into a suspected abuse of dominance by Unilever in the supply of single-wrapped impulse ice cream in the UK, finding no grounds for action.
The CMA launched the investigation in February 2017 under the Chapter II prohibition in the Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union (TFEU). The CMA focused on a period from January 2013 to February 2017 in which Unilever had run a series of promotional deals in the form of ‘package offers’. In exchange for purchasing a minimum number of single-wrapped impulse ice cream products, Unilever supplied retailers additional products at reduced prices or free of charge. The CMA investigation considered whether package offers would be likely to exclude competitors as the additional volume supplied by Unilever may fill (or nearly fill) the freezer capacity of the retailers (which is generally constrained).
However, the CMA concluded that although Unilever was likely to have had an “assured base of sales” in the four year period due to the strength of its ‘must-have’ ice cream products and its reservation of capacity in the freezers it supplies, the structure and availability of Unilever’s package offers (i.e.
whether they included both non-contestable and contestable products and whether they were available during periods of higher or lower sales volumes), taken together with the purchasing patterns of retailers, meant that the deals were unlikely to have had an exclusionary effect. In particular the CMA noted that the larger offers (which it considered were more likely to involve volumes that would be capable of filling freezers) were standalone promotions that were available for one calendar month in February and March, whereas most impulse ice cream sales take place in the summer. Although not essential to the decision the CMA also took into account the relatively limited take up of the larger offers and absence of any clear effect on market shares.
The decision’s impact is likely to be of interest to dominant companies in a range of sectors looking to offer short-term promotions. Overall it supports the view that such activity is permissible if kept within reasonable limits having regard to the structure of the market in question and the likely impact on the ability of others to compete.