TRADE TERMS TABLE INTRODUCTORY SLIDES HOW TO SUPPORT OUR LEGITIMATE GROWTH AMBITIONS IN COMPLIANCE WITH COMPETITION LAWS IN LATIN AMERICA TRADE TERMS TABLE.

TRADE TERMS TABLE

INTRODUCTORY SLIDESHOW TO SUPPORT OUR LEGITIMATE GROWTH

AMBITIONS IN COMPLIANCE WITH COMPETITION LAWS IN LATIN AMERICA

COMPETITION DELIVERABLES FOR 2015Competition Network will liaise to drive delivery of the following OTIF in 2015:

• Keep embedding compliance basics: each Competition Network member to present and implement a plan for Cluster or relevant Category, with their GC and colleagues

• Call for regulatory incentives for compliance: Competition Network to produce and implement External Engagement Strategy

• Champion “compliant collaboration”: Competition Team to lead work and advocacy around competition aspects of USLP, consistent with a 2015 Strategic Plan

• Confidently enforce our rights where appropriate: - As CD business partners, assist with implementation of robust

trade terms and rules on fair dealing (including as regards double agent concerns/copy-catting)

- Working with suppliers to ensure competitive terms secured and any abuses challenged.

LATAM COMPETITION FOCUS AREAS 20151. Issues trend! Assess risks with Legal -OOH IC, USLP, Detergents and HPC2. Make TTS reviews a key priority – LATAM TTS REVIEW

2015 Some markets need further attention3. Champion compliance at all times• Know, preach and practice the basics• Work with Legal to build robust business models4. Support CD Strategies – LATAM TT GUIDANCE CASCADE

2015• Check the quality of Agreements and record keeping• Good Understanding of Competition Law Areas of Risk• Use Legal for Guidance

DO NOT create or sit on time bombs –if in doubt, speak to Legal!

LATAM COMPETITION FOCUS AREAS 20154. Support CD Strategies – LATAM TTRS WP LEGAL REVIEW 2015LATAM TT GUIDANCE CASCADE 2015• Check the quality of Agreements and record keeping• Good Understanding of Competition Law Areas of Risk• Use Legal for Guidance

• STEP CHANGE IN PROACTIVE ROL LEGAL WILL PLAY IN CD BUSINESS PARTNERING.

• LOCAL CD AND COMPETITION CHAMPIONS WILL Paricipate in Key CD Meetings or Forums Formally Cascade and Train on this TT Guidance to CD BPs Be responsible for TT risks assessment WP Review and Address any Concern in Bespoke or Written TT

plans before they are implemented by the business. Implement a Formal Agenda for this.

TRADE TERMS TABLE

THIS GUIDANCE• Sets out different trade terms that we may or may not

offer to ensure our legitimate growth ambitions are fully compliant with competition laws. It contains basic legal advice, identifying:• Where BP can proceed with confidence, with caution

and should consult Legal and when they are never allowed

• Is available for Europe and Asia. Now we have ours for LATAM!

• Is intended for Unilever employees working in the CD function of Retail and OOH for all channels (including e-commerce) across the clusters involved: Brazil, Mexico, South Cone and Middle Americas. The legal considerations are also relevant to the FS business.

• Is subject to local laws and interpretations. If no safe harbour is provided, you should Consult Legal

• Is strictly confidential and should not be shared with or shown to anyone outside the Unilever Group of companies

TRADE TERMS TABLE

• This guidance is to be designed to be reviewed on screen, with hyperlinks that work when the document is viewed in slide show format.

• Our LATAM Trade Terms Table Guidelines and a complimentary Guidance for Lawyers is now posted in our Inside Page in Resource for BP and for Lawyers respectively.

PURPOSE - USING THE TRADE TERMS TABLE• Guidance to be used by CD when negotiating trade terms

• Guidance for Lawyers who are not specialised on the subject

• Organised along the 6Ps to reflect Perfect Store ideals

• Covers identified “risk areas” to secure compliance

• Focus on empowering teams dealing with such terms

Green column – CD teams can be confident that a trade term is unproblematic without consulting Legal

Red column – Consult Legal in all other circumstances/jurisdictions - Legal can often help find ways to eliminate risksTrade Term

Proceed with confidenceProceed with caution/Consult Legal/Never allowed

1. Providing Recommended Resale Prices (RRPs)

Proceed with confidence if:

a)you make clear in writing to the customer that it is free to sell at a different price; and

b)you do not use any incentives or pressure to encourage the customer to implement the recommendation.

Consult Legal in all other circumstances.

CONTENTS 6PS

Product

Pack

Place

Propositi-on

Price

Promotion

Collaborat-ion

Innovation

•Recommended resale price •Promo funding

• Potential Loyalty Building Effects • NPD Promotions

• Shopper Promotions

• Exclusivity•Rebates with Potential Loyalty-Inducing Effects• Payment for Services (OSA)

• Shelf Arrangements•Online Search Results Arrangements

• Volume Commitments• Volume-related Incentives• Growth and Target Rebates• Payment for Services

• Below Cost Selling• Discriminatory Terms

•Discount for EfficienciesEOT

•Payment for Services

N/A

Click on

coloured box togo to page

Glossary

General

Terms

KEY POINTS WORKING AT TT MODEL

1. “Agreements” can be defined very broadly|Includes “vertical” agreements between Unilever and its customers (i.e. trade terms) or suppliers

2. Consider what the object/effect of the agreement is

e.g. will exclusivity provisions cover so much of the market that competitors will not be able to compete?

3. Strong position = “special responsibility”4. “Dominance” needs to be determined according to the rules of each country http://gmi-bqt.unilever.com/reports5. Local Legal Privilege Rule consideration

EXAMPLES OF CONCERNS CAUSED BY TT

ProductExclusivity raises concerns if the exclusivity arrangements have the effect of excluding Unilever’s competitors from customers/the market

Shelf arrangements raise concerns if the amount of shelf space that Unilever reserves has the effect of unfairly excluding its competitors

Setting fixed or minimum resale prices doesn’t allow customers to discount their prices so leads to uniform and/or higher prices for consumers – in many countries resale price maintenance is always illegal

Paying as an incentive to implement Category Management advice category management advice affects competitors’ products so customers must decide freely whether to follow it, otherwise raises concerns that the category manager could use its position to exclude competitors

Paying for customer data must only receive data about Unilever products and must not share with other retailers, otherwise raises concerns about information exchange between competitors

Place

Price

Collaborat-ion

ABUSE OF DOMINANCEExamples of trade terms that may generally cause concerns that Unilever is abusing its position if it is dominant (e.g. > 50% MS):

Loyalty-inducing rebates raise concerns where they may have the effect of excluding competitors from customers/the market

Paying for services if Unilever overpays (i.e. more than competitors can afford), raises concerns that we could use the services exclude competitors

Volume-related incentives / growth and target rebates payments that reward a customer for buying all or most of its requirements from a dominant supplier raise concerns where they have the effect of excluding competitors

Discriminatory terms* raise concerns that by giving one customer better terms Unilever could give that customer an unfair competitive advantage

Selling at below-cost pricing* raises concerns about “predatory pricing” (i.e. taking a loss on prices to exclude competitors)

Product

Collaborat-ion

Propositi-on

General Terms

*In some countries discriminatory terms and below-cost pricing are examples of “unfair trade practices” that can be illegal even if Unilever is not dominant

IMPLEMENTATION OF TRADE TERMS GUIDANCE IN BELGIUM

• Trade Terms Table and specific Competition Law Guidance on Trade Terms launched in Europe in 2009 – very helpful for local lawyers!

• How has it been implemented in Belgium?• General communication (email) to Sales Directors with link to Competition

Law intranet and request to cascade the information to their teams

• Face to face trainings:• Intro training to all CD/Cat Mans

• Yearly face to face training in October/November

• Training to all CD new employees

• Yearly market definition / market shares exercice

• Involvement of Legal in the yearly negotiations

• Review of all client contracts (with focus on commercial terms) by Legal – no contract is signed if not reviewed by Legal (involvement of top management is key)

LOCAL IMPLEMENTATION AND FOLLOW UP

• Local implementation should be done at a local level within a month period.

• We will follow up local implementation and training at a local level at the LATAM Competition WG Monthly Calls.

• This will be posted at Inside Competition Page and next Global CD Bulletin CD E – News.

LOCAL IMPLEMENTATION AND FOLLOW UP• For cluster alignment, the following e mail message is

suggested for your CD community:

Legal: Introduction of LATAM Trade Terms Guidance for Business Partners and LawyersCreating a unified set of rules and parameters in the various countries in Latin America. 

As an ongoing journey for CD and their Legal BPs, LATAM CD Lawyers network is now rolling out the Trade Terms guidance table slides, targeted at CD employees across all countries in Latin America.  These guidance slides and table are modeled after existing EU and Asian materials. While it was challenging to create a unified set of rules and parameters due to the differing nature and state of laws in the various LATAM countries, the LATAM CD lawyers network was able to develop guidance a broad nature. This is designed to allow CD colleagues, to understand the key issues and watch-out areas and have them at the forefront of their minds when conducting their business day to day.   You can find these guidance documents on the Legal portal:

• LATAM:• Trade Terms Table Introductory Slides• Trade Terms Table

This is a step change in the role Legal will play in CD partnering to Support CD Strategies 2015 (Please refer to the Introductory Slides).

• |YOUR FEEDBACK IS WELCOME!