JUDGMENT OF THE COURT OF FIRST INSTANCE (Fifth Chamber)
23 October 2003 (1) (Action for annulment - Competition - Articles 85 and 86 of the EC Treaty (now Articles 81 EC and 82 EC) - Ice creams intended for immediate consumption - Supply of freezer cabinets to retailers - Exclusivity clause - Barriers to entry to the market - Property rights - Article 222 of the EC Treaty (now Article 295 EC))
In Case T-65/98,
Van den Bergh Foods Ltd, formerly HB Ice Cream Ltd, established in Dublin (Ireland), represented by M. Nicholson and M. Rowe, solicitors, with an address for service in Luxembourg,
applicant,
v
Commission of the European Communities, represented by W. Wils and A. Whelan, acting as Agents, with an address for service in Luxembourg,
defendant,
supported by
Masterfoods Ltd, established in Dublin (Ireland), represented by P.G.H. Collins, solicitor, with an address for service in Luxembourg,
and by
Richmond Frozen Confectionery Ltd, formerly Treats Frozen Confectionery Ltd, established in Northallerton (United Kingdom), represented by I.S. Forrester QC, with an address for service in Luxembourg,
interveners,
APPLICATION for annulment of Commission Decision 98/531/EC of 11 March 1998 relating to a proceeding under Articles 85 and 86 of the EC Treaty (Case Nos IV/34.073, IV/34.395 and IV/35.436 - Van den Bergh Foods Limited) (OJ 1989 L 246, p. 1),
THE COURT OF FIRST INSTANCE
OF THE EUROPEAN COMMUNITIES (Fifth Chamber),
composed of: R. García-Valdecasas, President, P. Lindh and J.D. Cooke, Judges,
Registrar: J. Plingers, Administrator,
having regard to the written procedure and further to the hearing on 3 October 2002,
gives the following
Judgment
Facts
1.
This action is for the annulment of Commission Decision 98/531/EC of 11 March 1998 relating to a proceeding under Articles 85 and 86 of the EC Treaty (Case Nos IV/34.073, IV/34.395 and IV/35.436 - Van den Bergh Foods Ltd) (OJ 1998 L 246, p. 1, hereinafter the contested decision).
2.
Van den Bergh Foods Ltd (hereinafter HB), a wholly-owned subsidiary of Unilever plc, is the principal manufacturer of ice-cream products in Ireland, particularly single-wrapped ice creams for immediate consumption (hereinafter impulse ice-creams). For a number of years HB has supplied ice-cream retailers with freezer cabinets, in which it retains ownership, and which are supplied free of charge or at a nominal rent, provided that they are used exclusively for HB ice creams (hereinafter the exclusivity clause). Pursuant to the standard terms of the freezer agreements, they can be terminated at any time on two months' notice on either side. HB maintains the cabinets at no cost to the retailer, save in cases of negligence.
3.
Masterfoods Ltd (hereinafter Mars), a subsidiary of the US corporation Mars Inc., entered the Irish ice-cream market in 1989.
4.
In the summer of 1989 many retailers with freezer cabinets supplied by HB began to stock and display Mars products. This led to a demand by HB that they comply with the exclusivity clause.
5.
In March 1990, Mars brought an action in the Irish High Court seeking, inter alia, a declaration that the exclusivity clause was void under domestic law and under Articles 85 and 86 of the EC Treaty (now Articles 81 EC and 82 EC). In a separate cross action HB claimed injunctions restraining Mars from inducing or procuring breaches of the exclusivity clause.
6.
In April 1990, the High Court granted an interlocutory injunction in favour of HB.
7.
On 28 May 1992, the High Court gave judgment in the actions brought by Mars and HB. It dismissed the action brought by Mars, and granted HB a permanent injunction restraining Mars from inducing retailers to stock Mars ice cream in freezer cabinets belonging to HB.
8.
Mars appealed against that judgment to the Irish Supreme Court on 4 September 1992. The Supreme Court decided to stay proceedings and to refer to the Court of Justice three questions for a preliminary ruling (see paragraph 30 below). That reference was the subject of the judgment of the Court of Justice in Case C-344/98 Masterfoods and HB [2000] ECR I-11369. At the date of the present judgment, the proceedings before the Supreme Court are still pending.
9.
In parallel to those proceedings before the Irish courts, on 18 September 1991 Mars lodged a complaint with the Commission under Article 3 of Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-1962, p. 87). The complaint related to the provision by HB, to large numbers of retailers, of freezer cabinets to be used exclusively for HB products.
10.
On 22 July 1992, Valley Ice Cream (Ireland) Ltd also lodged a complaint against HB with the Commission.
11.
On 29 July 1993, the Commission issued a statement of objections to HB in which it concluded that HB's distribution arrangements infringed Articles 85 and 86 of the Treaty (hereinafter the 1993 statement of objections).
12.
Following negotiations with the Commission, HB, while contesting the Commission's view, proposed changes to its distribution arrangements, with a view to qualifying for an exemption under Article 85(3) of the Treaty. Those changes were notified to the Commission on 8 March 1995 and in a press release of 10 March 1995 the Commission stated that, at first sight, the new distribution arrangements might enable HB to obtain an exemption. On 15 August 1995 a notice pursuant to Article 19(3) of Regulation 17 was published in the Official Journal of the European Communities (OJ 1995 C 211, p. 4).
13.
On 22 January 1997 the Commission sent HB a new statement of objections in which it expressed the view that the changes had not achieved the expected results of free access to sales outlets (hereinafter the 1997 statement of objections). HB replied to those objections.
14.
On 11 March 1998 the Commission adopted the contested decision.
The contested decision
15.
In the contested decision the Commission states that HB's distribution agreements containing the exclusivity clause are incompatible with Articles 85 and 86 of the Treaty. It defines the relevant product market as the market for single-wrapped items of impulse ice-cream and the relevant geographic market as Ireland (recitals 138 and 140). It states that HB's position on the relevant market is particularly strong, as is shown by its market share over many years (see paragraph 21 below). That strength is further illustrated by the degree of both numeric (79%) and weighted distribution (94%) of the relevant HB products during August and September 1995 and by the strength of the brand and the breadth and popularity of its range of products. HB's position on that market is further reinforced by the strength of Unilever's position, not only on the other ice-cream markets in Ireland (take-home and catering), but also in the international ice-cream markets and the markets for frozen foods and consumer products generally (recital 141).
16.
The Commission observes that the network of HB's distribution agreements relating to freezer cabinets installed in outlets has the effect of restricting the ability of retailers who are parties to those agreements to stock and offer for sale in their outlets impulse products from competing suppliers, in circumstances where the only freezer cabinet or cabinets for the storage of impulse ice-cream in place in their outlets have been provided by HB, where the HB freezer cabinet or cabinets is or are unlikely to be replaced by a cabinet owned by the retailer and/or supplied by a competitor, and where it is not economically viable to allocate space to the installation of an additional cabinet. It considers that the effect of this restriction is that the competing suppliers are precluded from selling their products to those outlets, thereby restricting competition between suppliers in the relevant market (recital 143). The Commission did not take into consideration the restrictive effect of each individual agreement, but rather the effect produced by the category of agreements fulfilling the abovementioned conditions and constituting an identifiable part of the network of HB's freezer cabinet agreements as a whole. According to the Commission, the assessment of the restrictive effect of that part of HB's network then applies equally to each of the agreements comprising that part. The assessment of this restrictive effect was made against the background of the effect of all similar networks of freezer cabinet agreements operated by other ice-cream suppliers in the relevant market, as well as in the light of any further relevant market conditions (recitals 144 and 145).
17.
The Commission then quantified the restrictive effect of HB's distribution agreements in order to show their significance. It observes that the restrictive effect of the networks of agreements for the supply of freezer cabinets reserved exclusively for the supplier's products are the result of the space constraints inevitably experienced by retail outlets. The average number of cabinets in place in outlets is 1.5, according to the survey carried out by Lansdowne Market Research Ltd in 1996 (hereinafter the Lansdowne survey), while the retailers consider that the optimal number of freezer cabinets to have in place in an outlet at the height of the season would be 1.57 (recital 147).
18.
The Commission states that only a small proportion of retail outlets in Ireland, 17% according to the Lansdowne survey, have freezer cabinets which are not subject to an exclusivity clause. It maintains that those outlets may be referred to asopen outlets, in the sense that retailers are free to stock in them the impulse ice-cream of any supplier (recital 148). As regards the other outlets, 83% according to the Lansdowne survey, in which the suppliers...
