Traditionally, there have been two main suppliers of ice cream in Germany. Both have required their retail outlets to sign exclusive agreements preventing the retailer from selling ice cream of other suppliers. In 1985, these agreements were notified to the European Commission which raised no objection and issued a comfort letter. In about 1990, Mars attempted to enter the German ice cream market with new types of ice cream based on its candy bars. The pre-existing exclusive agreements made it difficult for Mars to find outlets for its products and it complained to the European Commission. The Commission reconsidered the exclusivity agreements, found them to be a restraint of trade and thus in breach of Article 85 of the Treaty of Rome and ordered the suppliers not to enter into any further agreement of this type for five years.

The traditional ice cream suppliers appealed to the European Court of First Instance. The court had three questions to decide: first, whether the agreements were anticompetitive as to be covered by Article 85 (1); second, whether they were covered by an exemption under Article 85 (3); and third, whether the Commission could prohibit agreements in futuro. On the first the court believed that the Commission had misdefined the relevant product market in its analysis by failing to look at other "interchangeable" products but held that this error was not material to the Commission's decision. Otherwise, the Commission had been correct in concluding that the agreements were liable to have an appreciable effect on competition and, notwithstanding the fact that only German retailers were involved, the agreement could still have an impact on inter-state trade within the EU. Thus, the agreement fell within the scope of Article 85 (1).

The Court then had to consider whether the comfort letter that the Commission had issued in 1985 in fact conceded that the agreements were covered by an exemption under the Exclusive Purchasing Group Exemption made under Article 85 (3) of the Treaty of Rome. The Court found that the changes in the market after the issue of the comfort letter were such that the Commission was entitled to re-evaluate its position and that since the agreements were subject to automatic annual extensions after an initial two-year term, they did not fall within the group exemption which was confined to agreements having a fixed term of fewer than five years. The Commission's decision on this point, therefore, was also correct. The Court did, however, find that the Commission lacked the power to restrict the application of the group exemption to future agreements under these provisions if the parties drew up fresh agreements, the application of the group exemption to them would have to be considered on their own merits.