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1. Notification was made by Poldys Fresh Foods (Portumna) Limited on 30 September 1992 with a request for a certificate under Section 4 (4) of the Competition Act, 1991 or, in the event of a refusal by the Competition Authority to grant a certificate, a licence under Section 4(2) in respect of a Sole Manufacturing and Supply Agreement.

2. The notification concerns a Sole Manufacturing and Supply Agreement, dated 7 December 1990, whereby Poldys Fresh Foods (Portumna) Limited[1] (“Poldys”) is appointed sole manufacturer and supplier of certain nominal five-ounce pastry pies (“the Products”) to Birds Eye/Wall’s Ltd. (“Birds Eye”).

3. Poldys is part of a group of companies, being a wholly-owned subsidiary of Poldys Fresh Foods Limited of Naas Industrial Estate, Naas, County Kildare [2]. Poldys’ turnover for the year ended 27/3/1992 was IR£42,731,035.

4. Birds Eye also forms part of a group of companies, the ultimate parent company of which is Unilever plc. The turnover of Unilever Group was Stg£23.163bn in 1991. This figure is not broken down to give the turnover of Birds Eye and the annual accounts thereof are not available.

5. The Products are frozen pastry pies, as follows:-

Chicken 24 x 1

Chicken 12 x 4

Steak and Kidney 24 x 1

Steak and Kidney 12 x 4

The frozen pastry pie market in the State forms only a small part of the overall frozen food market in the State. The parties claimed that precise market data of the Irish frozen pie market is not available. However, the parties gave their best estimate of the value of the market in the State as IR£1m per annum, approx.

6. The parties claimed that the most popular types of frozen pies available in the State are Steak and Kidney, Minced Beef and Onion, Chicken and Vegetable, Chicken Curry, Steak and Vegetable, and Steak Pie. All such goods are widely available and their consumption is not limited to any particular group in society. The parties claimed that there are many brands of such frozen pies sold in the Irish market. All compete with each other to a greater or lesser degree and substitution can easily occur due to the wide choice of broadly similar products available.

7. As stated in the Agreement, Poldys is also entitled to supply Quinnsworth, Stewarts Supermarkets and Crazy Prices with various types of frozen pie. These supplies amounted to approximately 23% of the Irish Market. The parties claimed that the supply of the products by Poldys to Birds Eye represented approximately 6% of the Irish market in frozen pies with an approximate annual value of IR£60,000.

8. The parties claimed that there are no barriers to entry in the market.

9. The manufacturing market in the State in these goods is estimated by the parties to be divided among the companies set out below in the following shares:-

Poldys 29%

Eatwell Limited/Dunnes Stores 23%

McColgans N.I. Limited 22%

Others 26%

10. The sales of each of the parties in the State in the goods affected by the Agreement is approx. IR£60,000. The parties claimed that the retail market share of the parties in the goods affected by the Agreement represents approximately 6% of the Irish market in frozen pies, which market, in turn, forms a very small part of the overall frozen food market in the State.

11. Neither party has an associated company competing in the market affected by the Agreement.

12. The frozen food market in the State was estimated to be worth IR£186m at retail prices in 1997. Birds Eye brands claimed to have a market share of 30% of the whole frozen food market by value in 1997. It was estimated in Checkout Magazine (in 1997) that Green Isle had a 35.5% market share by volume (41.2% by value) in the frozen goods market in the State. The Authority, however, considers that the relevant market is the market for the manufacture and supply of frozen pastry pies in the State. In 1996 IR£38.664m worth of meat and offal of poultry, prepared or preserved (which is the category where chicken pies are accounted for), was exported from the State. Of this, 83% went to Great Britain, and 10% went to Northern Ireland. In the same year, IR£25.567m worth of product in the same category was imported into the State. Of this, 59% came from Great Britain. In the category of meat and offal of bovine animals, prepared or preserved (the category into which steak and kidney pies fall) there were exports of IR£47.883m (again with the vast bulk going to the UK) and imports of IR£7.457m.

13. The Agreement provides that Poldys shall be the sole manufacturer and supplier to Birds Eye of four types of frozen nominal five-ounce pastry pies, which Birds Eye then resells in its own name. The agreement was for one year (at minimum), to continue thereafter unless terminated by either party.

14. The parties drew the Authority’s attention to the following provisions of the agreement which might restrict the parties in their freedom to take independent commercial decisions:-

Clause 1.1

The appointment of an exclusive supplier for a particular product (exempted from Article 85 (1) of the Treaty of Rome by Article 1 of the Block Exemption 1984/83 dealing with agreements analogous to the Agreement.

Clause 1.2

The prohibition on the exclusive supplier from entering into a Supply Agreement with certain third parties for the term of the Agreement in respect of the Products (exempted by Article 2 of the Block Exemption).

15. The parties claimed that the agreement does not contravene Section 4 (1) of the Competition Act, 1991 and is not restrictive of competition on the part of Poldys since it provides that Poldys may supply competitors of Birds Eye with goods which are of a nature very similar to the Products.

16. The parties further stated that approximately 90% of the number of frozen pies manufactured by Poldys is exported. The remaining 10% (approximately) is sold in the Irish market. Of this, the parties stated that approximately 20% is sold to Birds Eye, the remainder (approximately 80%) is sold to certain other parties, as specified in the Agreement, all of whom compete in the Irish market with Birds Eye. Poldys’ sales to Birds Eye for the Irish Market represented only 0.4% of the total manufacturing output of Poldys.

17. The parties presented arguments in favour of the grant of a licence which, in the opinion of the Authority, are not relevant in this case.

18. There were no submissions by third parties.

19. Section 4(1) of the Competition Act states that “ all agreements between undertakings, decisions by associations of undertakings and concerted practices, which have as their object or effect the prevention, restriction or distortion of competition in goods or services in the State or in any part of the State are prohibited and void ”.

20. Section 3(1) of the Competition Act defines an undertaking as “ a person, being an individual, a body corporate or an unincorporated body engaged for gain in the production, supply or distribution of goods or the provision of a service ”. Poldys is engaged for gain in the production of frozen food goods and is, thus, an undertaking. Birds Eye is an undertaking involved in the sale of frozen food goods and is, thus, an undertaking. Both parties are, therefore, undertakings and the agreement is an agreement between undertakings. The agreement has effect within the State.

21. The Authority considers that the relevant market is the market for the manufacture of frozen pastry pies in the State. The parties claimed that Poldys has 29% of this market and is the single biggest producer of the products in the State. The Authority considers that, given that Poldys supplies sellers other than Birds Eye, the existence of other manufacturers in the State and the extent of trade in parallel imports (it is possible for other resellers to get their products manufactured abroad and imported into the State), this market is open to significant competition in the State.

22. The Authority considers that the obligation on Poldys not to enter into a supply agreement in respect of nominal five-ounce pastry pies with any third party (other than the existing customers and given the significant competition in the market) without the consent of Birds Eye during the term of the agreement is necessary to give Poldys the incentive to perform its functions under the agreement to the best of its abilities. This obligation allows Birds Eye to have every confidence that Poldys will operate the agreement in a manner which is in the interests of both parties. In the opinion of the Authority, this restriction does not contravene Section 4(1).

23. In the Authority’s opinion, Poldys and Birds Eye are undertakings within the meaning of Section 3(1) of the Competition Act, 1991, and the notified arrangements constitute an agreement between undertakings. In the Authority’s opinion, the agreement notified does not contravene Section 4(1) of the Act.

24. The Competition Authority has issued the following certificate :

The Competition Authority certifies that, in its opinion, the agreement of 7 December 1990 for Sole Manufacture and Supply notified under Section 7 of the Competition Act, 1991, on 30 September 1992, does not contravene Section 4(1) of the Competition Act.

[1] Poldys Fresh Foods (Portumna) Limited changed its name to Green Isle (Portumna) Limited in 1993.

[2] Poldys Fresh Foods Limited changed its name to Green Isle Food Group Limited in 1993.