Cleary Gottlieb successfully represented Mars, Inc. and its Italian subsidiary Masterfoods S.p.A. in winning a key judgment in the Consiglio di Stato (Council of State), the highest Italian administrative court, against the Italian Competition Authority and wrapped impulse ice-cream producers Unilever, Nestlé, Sammontana and Sanson. On July 13, the Council of State granted the Mars group’s appeal and set aside a lower court’s 2004 ruling, which upheld a decision in which the ICA found that the four suppliers’ wholesale, outlet and freezer exclusivity practices did not violate Article 81 EC, and that Unilever’s standard exclusive-distribution agreements did not have as their object or effect the restriction or distortion of competition within the meaning of Article 2 of the Italian competition statute.
This ruling has implications beyond the Italian market, in particular since various national courts and competition authorities have dealt and are dealing with parallel cases raising similar issues. The application of the unlawful exclusivity provisions has been a contractual practice adopted by the majority of impulse ice-cream manufacturers in the European Community for over 15 years, and companies in the Unilever group have played a significant role in this market in several Member States. The case follows in the line of the similar Langnese/Schöller and Van den Bergh Foods cases, both concerning companies of the Unilever group and their respective impulse ice cream’s distribution policy in Germany and Ireland, respectively, in which the European Commission’s infringement decisions were upheld by the Community courts of law. Therefore, the appellants argued before the Council of State that the solution reached by the ICA, and upheld by the lower court, was so fundamentally inconsistent with the established EC case law in this area, that the coherent and effective application of Article 81 EC throughout the Community was at stake.