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Thursday, May 6, 1999 Published at 09:12 GMT 10:12 UK


Business: The Company File

Watchdog licks ice cream makers

Ice cream: A lucrative market and a trading minefield

Some of the biggest names in British ice cream face accusations of stitching up the market by flexing their corporate muscles.

One of the major offenders in an investigation into monopolistic practices could be Birds Eye Walls, owned by Unilever.

Its well-known brands include: Cornetto, Feast, Magnum and Viennetta.

The major bone of contention is the way in which the big manufacturers supply shopkeepers with freezers and then either ban them from stocking rival products or severely restrict the amount of competing ice creams they can stock.

The Competition Commission has published a letter outlining its concerns over the ice cream business, and said it had written to the industry's major players asking for their views.

Ice cream wars

The letter marks the half-way stage in a long-running investigation into the £600m market for impulse-purchase ice cream - the bars and lollies sold mainly through small shopkeepers.


[ image: Big manufacturers are accused of restricting small shopkeepers' stock]
Big manufacturers are accused of restricting small shopkeepers' stock
While emphasising that no conclusions had been reached, the letter said: "The Competition Commission considers that a monopoly situation may exist in favour of Birds Eye Walls."

In the wrapped ice cream market Birds Eye Walls is thought to have a 70% share of sales.

While Birds Eye Walls, which is part of the giant Unilever group, is the only company named in the letter, the commission's statement refers to "certain manufacturers", and other companies are likely to be under the investigators' spotlight.

The Commission has also written to other leading manufacturers, including Mars and Nestle.

Arm-twisting?

The commission is also considering the practice of manufacturers recommending the price at which ice cream is sold, and is investigating allegations that some distributors are given preferential treatment by manufacturers.

Again the only company named in connection with this issue is Walls Direct, the distribution arm of Birds Eye Walls.

Last month a number of ice cream wholesalers complained to the Office of Fair Trading that Walls Direct was offering retailers unfair incentives to buy through its distribution network.

The Competition Commission's final report is due to be submitted to the Secretary of State for Trade and Industry on 21 September.

Troubled times

This is the fourth investigation into the UK's ice cream industry in 20 years.

The forerunner to the Competition Commission, the Monopolies and Mergers Commission, has already found Wall's wholesaling practices were anti-competitive and it recommended a thorough investigation of the entire industry.

Wall's has since revamped its distribution system.





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