By decision of 31 October 2017, the Italian Competition and Markets Authority (‘the AGCM’) found that Unilever Italia Mkt. Operations Srl (‘Unilever’) had abused its dominant position on the Italian market for the sale of individually packaged ice cream for consumption, away from homes, at various sales outlets. In particular, Unilever’s independent distributors, included in the contracts with retailers, exclusivity clauses, which obliged them to obtain supplies, exclusively, from Unilever. By signing these contracts, the retailers, would receive loyalty discounts and sales bonuses.

Although the abusive conduct was committed by Unilever’s distributors, rather than Unilever itself, the AGCM considered that the conduct had to be imputed solely to Unilever on the ground that Unilever and its distributors behaved as if they were the same economic entity. The Competition Authority considered, inter alia, that these practices had precluded, or at least limited the competitors to engage in competition on the merits of their products.

The Competition Authority considered the fact that the use of exclusivity clauses by an undertaking in a dominant position was sufficient to establish abusive use of that position and imposed a fine of approximately €60 million on it in breach of Article 102 TFEU.

Since the first instance court sided with the AGCM, Unilever lodged an appeal before the Italian Council of State. The Court then referred to the EU Court of Justice two questions:
(i) whether the actions of independent distributors may be imputed to their supplier and, if so, under which circumstances.
(ii) whether the competition authority is required to examine in detail economic analyses produced by the dominant undertaking during the administrative procedure, suggesting that the practice in question is incapable of producing such exclusionary effects.

Regarding the first question, CJEU held that nothing precludes the possibility of finding a dominant company liable under Article 102 TFEU for the conduct of its independent distributors, if certain circumstances are present. Specifically, where the distributors are merely an instrument of territorial implementation of the commercial policy of an undertaking and on that basis, the instrument by which, the exclusionary practice at issue was implemented. CJEU recognised that where such conduct is decided unilaterally, without the involvement of the distributors, the dominant undertaking should be considered to have committed the abuse and is therefore solely responsible for it.

Concerning the second question, the court held that where a competition authority suspects that an undertaking has infringed Article 102 TFEU by using exclusivity clauses, before adopting its decision the authority must examine in detail the evidence submitted by the undertaking (in this case the economic analyses) and cannot under any circumstances ignore them.

As preliminary rulings are binding both on the referring court and on all courts in Member States, the Italian Council of State is expected to implement the decision immediately

The Editorial Team