Eighties’ ice cream wars draw to a close – but does anyone care?

I’ve always thought that of all the spin machinery at the Government’s disposal, the most effective is some of the oldest – the 30-year disclosure rule. Civil servants of yesteryear could teach the communications apparatchiks of today a thing or two.

The fashion these days is to address political issues in communications terms – the US Democrats developed rapid rebuttal as a communications technique and its more or less accepted practice that you should get your reaction in first these days if you’re to win an argument. What the British forebears of modern communications management knew is that boredom is a potent weapon. Lock up government papers for 30 years and what they contain simply ceases to matter.

Newspapers may feign public interest justification for “news” that Harold Macmillan contemplated having Christine Keeler deported or that Harold Wilson considered cloning himself, but what would have rocked the Establishment in the Sixties has ceased to be of any consequence in the Nineties.

Much the same policy seems to apply at the European Commission, which next month publishes its decision on an appeal over its judgment on “freezer exclusivity” in Ireland. For those of you who have not followed this issue step by step over the past decade, it arises from a bloody and protracted competition battle between Unilever and Mars over ice cream marketing in Ireland.

One of the most extraordinary aspects of this regulatory inquiry is not whether Unilever acted anti-competitively in the Irish market, but that anyone should be remotely surprised if they did and, even if they did, whether it matters very much. The nicest way of putting it is that time is a great healer – more bluntly, if it’s difficult to get worked up about real wars of 50 years ago (witness the forgive-and-forget lobby during the Japanese emperor’s visit recently), it’s considerably harder to get worked up about ice cream wars of a decade ago.

That’s not to say that Mars won’t get worked up. The memory of Unilever’s alleged atrocities is still fresh. For its part, Unilever can be expected to grow quite excited if it finds itself on the receiving end of a $1bn damages claim from Mars. The EC ruled in March that Unilever had abused its dominant position in the Irish market, where its HB subsidiary has more than 85 per cent of the market for impulse-bought ice creams. Mars entered that market in the late-Eighties and claims that Unilever excluded product from rival companies in its retail freezer cabinets as part of a deliberate strategy to squeeze Mars out of European operations.

Unilever has countered, so far unsuccessfully, that freezer exclusivity is anti-competitive, claiming retailers are free to take rival manufacturers’ cabinets. Now it has emerged that documents prepared by Unilever’s paramilitary-sounding Frozen Products Co-ordination task force, which were seized by the EC in 1991, demonstrate that freezer exclusivity was a crucial Unilever tactic in defending its markets.

Mars is making triumphalist noises. Unilever is claiming that it’s all old hat. There is some virtue in both positions, but it is as well to reiterate the point that, ten years or more on, is anybody – apart from Mars – likely to care? In this instance, I would claim that it isn’t just the passage of time that has led to widespread ennui – which will serve Unilever’s best purpose – but the historical context in which those original ice cream wars were set and what has happened since.

It has to be remembered that free markets were tremendously fashionable in the Eighties. Indeed, driven by Thatcherite zealotry, there was almost a moral dimension to competition in markets.

That led to a crusade in parts of Europe beyond the jurisdiction of the British Government, fuelled by American tastes for firm anti-trust action, to break up vertical integration in all its manifestations. What Britain did to its brewers is a case in point. The control by major brewers of tied-houses and what they sold was perceived as a consumer evil and the on-trade was taken down a route that led to the Beer Orders, guest brews, rescheduled leases and the destruction, for better or worse, of British brewing and beer retailing as we knew it.

This time last year, I wrote that Reuters looked as if it was developing a monopoly in “down-spec” information technology in emerging markets in Eastern Europe. Reuters subsequently took me to task and I realised that its life is considerably more complicated than that – not least in the the economies of scale it will need to build in order to take on giant rivals, such as Bloomberg, in their home markets in the US.

I’m not about to say that the baby of competition should be thrown out with the bathwater of regulation, but what I am saying is that markets are not best served by bureaucratic regulators which make judgments many years after the markets they preside over have moved on.

If Unilever loses its appeal to the EC, then it should be held to account. But it would serve the best purpose not only of the allegedly injured party, Mars, but also be a more effective deterrent of the likes of Unilever if such matters were resolved according to the climate of the times, rather than when everyone, other than the principals involved, have ceased to care.

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