An ice cream war: Bundling, tying, and foreclosure
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Ice cream markets in Europe are characterized by vertical restraints of varying degrees of restrictiveness. Mars, an entrant to the market, sought to establish in a court action and in a complaint to the European Union Commission that the dominant incumbent, Unilever, had acted with the object and effect of foreclosing the market in Ireland by bundling the price of ice cream and freezer services and restricting retailers to stocking Unilever product alone in freezers supplied by them. This article applies a model of bundling, tying, and foreclosure developed by M.D. Whinston to demonstrate that it would not have been rational for Unilever to attempt to foreclose the market by means of these restrictions and therefore that the Commission was not justified in obliging Unilever to accept the changes imposed on it.
Keywordsvertical restraints tying bundling foreclosure abuse of a dominant position
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