The European Court of Justice (ECJ) has confirmed that in some circumstances the provision of display cabinets and freezers to retailers and others for the exclusive sale of the supplier’s products can be an unlawful restraint of competition.
The case concerned an ice cream supplier which is a subsidiary of Unilever. The supplier provided retailers in Ireland with freezer cabinets, from which to sell its products, under an agreement which banned their use for the products of any competitor. The ECJ did not take issue with the exclusivity clause as such but, because the company was a dominant supplier in the Irish market, it considered the arrangement to be operating in restraint of trade. The arrangement prevented other suppliers from getting a foothold in the market and prevented the retailers from selling other brands. A similar restriction to this sort of restraint of trade has applied in the UK for several years.
Such arrangements are common in a number of markets, such as the supply of groceries, cold drinks, snack foods and warm foods. The test will therefore be whether the supplier has a dominant position in the market and, if so, whether the arrangement constitutes an abuse of that position.