CADE’s Superintendence starts proceeding in the ice cream market

On October 07th, the General Superintendence of the Administrative Council for Economic Defense – CADE started an administrative proceeding (PA 08012.007423/2006-27) to investigate alleged anticompetitive violations by Unilever Brazil Ltda./Kibon and Nestlé. Initial findings indicate that the companies may be hampering competition in the ice cream resale market, specially in small shops, such as cafeterias and snack bars.

Conducts under investigation include possible resale exclusivity, publicity priority or exclusivity (that prevent or hinder the exposure of competing products), both in exchange for bonuses; prohibition of storage of competing products inside freezers lent by the companies; setting of minimum turning sales; favorable contracting clauses for the renewal of contracts; and possible distribution exclusivity.

The proceeding intends to investigate whether the practices adopted by Unilever/Kibon and Nestlé could implicate anticompetitive effects in the ice cream market and if they could potentially lead to market foreclosure and/or increase of rivals’ costs. According to the Superintendence, such conducts, if confirmed, could entail exclusion of competitors, barriers to entry of new firms, higher prices, and fewer choices to consumers.

"Therefore, it is the case for an administrative proceeding, as to enable the companies to present justifications and market efficiencies derived from the above mentioned contracts clauses, without losing sight, however, of its anticompetitive potential. Thus, the Antitrust Authority will be able to evaluate relevant evidence of anticompetitive effects derived from such practices", states the Superintendence’s Official Opinion.

The companies will now be notified to file their defense within 30 days. At the end of the investigation, the General Superintendence will issue an opinion stating for the conviction or the closing of the case, which will then be sent for final judgment by Cade’s Tribunal.