Unilever 2008 Annual Report Download - page 129

Notes to the consolidated accounts Unilever Group
126 Unilever Annual Report and Accounts 2008
Financial statements
25 Commitments and contingent liabilities (continued)
Legal proceedings
We are involved from time to time in legal and arbitration proceedings arising in the ordinary course of business. However, although the
outcome of legal proceedings are inherently difficult to predict, we are currently not involved in any legal or arbitration proceedings which may
be expected to lead to material loss or expenditure in the context of the Group results. Similarly we do not have any material obligations under
environmental legislation. None of our Directors or Officers is involved in any legal proceedings which are material as aforesaid. The following
are the most significant legal proceedings in which the group is currently involved.
Ice cream cases
As previously reported, in 2006 the European Court of Justice ruled to dismiss the appeal by Unilever’s Irish ice cream business, HB Ice Cream,
of a 2003 Court of First Instance judgment that upheld the European Commission’s 1998 decision to ban HB Ice Cream from imposing cabinet
exclusivity in Ireland in circumstances where Unilever cabinets were the only cabinets used by the retailer. Although this final ruling related to a
Commission decision that applied to Ireland only, Mars subsequently sought to bring legal claims against Unilever before the courts and to
lodge complaints with the competition authorities in a number of European countries in the course of 2007.
In April 2008 Mars and Unilever reached an agreement to settle out of court their differences in respect of distribution arrangements for the
sale of Unilever's impulse ice cream. Neither the talks themselves nor any resulting settlement imply any admission of liability on Unilever's part.
The payment to be made by Unilever to Mars under the terms of the settlement has been fully provided for.
As regards investigations previously instituted by national competition authorities, the Portuguese competition authority confirmed in 2008 that
it had closed its investigation into Unilever’s Portuguese ice cream business, subject to certain monitoring obligations that will apply for three
years. In Italy, a 2007 ruling by the Consiglio di Stato overturned the 2003 decision of the Italian competition authority (‘ICA’) that responded
positively to a notification by Unilever of its policy in relation to outlet exclusivity. The Consiglio di Stato took the view that Unilever’s market
position in Italy had not been sufficiently investigated by the ICA. To the extent that the ICA decides to reinvestigate the matter, Unilever will
engage proactively with the authority with a view to securing a prompt resolution to any outstanding issues.
Other competition issues
As previously reported, in 2006 the French competition authorities commenced an inquiry into potential competition law infringements in
France involving a number of consumer goods companies in the home and personal care sector, including Unilever France and Lever Fabergé
France, both subsidiaries of the Unilever Group. Interviews have been conducted with present and former members of our staff and documents
have been supplied to the French authorities. No Statement of Objections or proposals for fines have yet been lodged against either Unilever
France or Lever Fabergé France as the authorities’ investigation has had to be restarted following procedural challenge. Accordingly, the
potential financial implications, if any, of this investigation cannot yet be assessed. A Statement of Objections is, however, expected in the near
future.
By a decision dated 19 February 2008, the German Federal Cartel Office imposed a fine on Unilever in relation to anti competitive behaviour in
the toothpaste market in Germany. Unilever lodged an appeal against that decision on 29 February 2008. However, in light of a revised decision
reducing the fines to be imposed upon Unilever, the appeal was withdrawn by Unilever on 9 October 2008.
On 25 February 2008, a purported class action lawsuit was filed in the United States of America in the United States District Court for the
Northern District of Illinois alleging, relying upon the German investigation described above, that Unilever N.V., Unilever PLC and Unilever United
States, Inc. allegedly conspired with certain other companies to fix prices of oral, home and personal care products in the United States. On 18
December 2008, the trial court issued an opinion dismissing all claims in the case for lack of jurisdiction.
In April 2008, Unilever received a notice from the UK Office of Fair Trading requiring the production of documents in relation to an investigation
into potential co ordination of the retail prices of certain products in the grocery sector. A response to the notice was provided in June 2008. It
is too early to gauge whether the investigation to which the notice relates will lead to a Statement of Objections being addressed to Unilever or
its subsidiaries.
In June 2008, Unilever premises in Austria, Belgium, Italy, The Netherlands and Spain were the subject of unannounced inspections by the
European Commission and/or national competition authorities. The inspections were in relation to the home care and/or personal care markets.
Requests for information from the European Commission relating to alleged anti competitive behaviour in detergents markets in the EEA were
subsequently received by Unilever in July 2008 and December 2008. Responses were provided in October 2008 and January 2009, respectively.
Separately, a request for information relating to alleged anti competitive behaviour in personal care markets in The Netherlands was received by
Unilever from the Dutch Competition Authority in November and a response filed in December 2008. It is too early to gauge whether the
investigations that have been initiated will lead to Statements of Objections being addressed to Unilever or its subsidiaries.
In late 2008 Unilever Greece attended hearings before the Greek Competion Authority in relation to an alleged violation of competition rules
deriving from a term previously included in its contracts with a limited number of retailers in the period 2000 to 2002 in relation to parallel
imports. As from 2003 Unilever Greece had voluntarily removed the relevant term from its contracts. A decision in this case is expected in
March 2009.
It is Unilever’s policy to co-operate fully with the competition authorities in the context of all ongoing investigations.