StandWithUs & IAC urge Uniliver to overturn Ben & Jerry's Israel decision
From Roz Rothstein, CEO & Co-Founder, StandWithUs
Dear Mr. Jope:
We write on behalf of StandWithUs and the Israeli-American Coalition for Action to follow up on your letter of July 27, 2021, regarding Ben & Jerry’s decision to effectively boycott the State of Israel by cutting ties with its licensee there. To be clear, and as explained below, Ben & Jerry’s decision is, in practice, a decision to boycott the entire State of Israel, as companies are not legally permitted to sell to some Israelis while boycotting others. We are disappointed by the disingenuous attempts by Unilever and Ben & Jerry’s to claim otherwise. We are even more disappointed by Unilever’s attempt to feign powerlessness over this boycott decision. You write: “As part of the acquisition agreement, we have always recognised the right of [Ben and Jerry’s] and its independent Board to take decisions in accordance with its social mission.” But a review by legal experts of the acquisition agreement indicates that the Ben and Jerry’s Board has exceeded its contractual powers and that Unilever thus has the right to reverse the Board’s decision.
Unilever has two independent contractual bases for forcing the Board to rescind the boycott. First, the contract gives Unilever the power to make “financial and operational” decisions for Ben & Jerry’s; the Board can make “social” decisions only insofar as they are “commercially reasonable.” (Emphasis added). This limitation on the Board’s social decisions appears again and again, referring to everything from the use of fair-trade products, to the use of unbleached paper in packaging, to purchasing from nonprofit suppliers or suppliers from economically disadvantaged groups. And it makes perfect sense. Unilever would never have agreed to buy Ben & Jerry’s if the Board could make any commercially unreasonable decision it wished under the guise of its social mission. However, neither Unilever nor Ben and Jerry’s has explained how it is commercially reasonable to effectively boycott Israel—because it is not. Boycotting an entire country is, in fact, commercially unreasonable, especially when it triggers counter-boycotts by states and consumer groups and divestment of state pension funds. In fact, since the boycott announcement, Unilever has underperformed competitors, suggesting that the boycott decision has harmed your investors.
Second, the merger agreement states that “[Ben and Jerry's] shall use commercially reasonable efforts to obtain (at [Ben and Jerry's] expense) for [Unilever] the right to conduct all facets of the Business in Israel.” This language directly conflicts with effectively boycotting Israel. Ben and Jerry’s must explain—to you and to the investing public—how its social mission requires such a boycott when it signed a contract showing that doing business in Israel was consistent with its social mission. Clearly, it is Ben and Jerry’s that is in breach, and it is within Unilever’s rights to reverse the Board. If it fails to do so, Unilever itself—not only Ben & Jerry’s—will be effectively choosing to participate in this boycott.
We are also troubled by what appear to be false statements made by Unilever and/or Ben and Jerry’s regarding the scope of the boycott, which are repeated in your letter. On July 19, 2021, Ben and Jerry’s announced, “Although Ben & Jerry’s will no longer be sold in the O[ccupied] P[alestinian] T[erritories], we will stay in Israel through a different arrangement.” As we understand it, this statement was actually written by Unilever and adopted by Unilever as its own via a press release linking to the statement. Anuradha Mittal, the Board Chair who apparently pushed for Ben & Jerry’s to cut ties with its Israeli licensee, has described this statement—your statement—as a form of “deceit.” She has explicitly promoted boycotts targeting all of Israel and implied Israel’s existence is a “catastrophe.” Furthermore, as you must know, Israeli law bars boycotts of Israeli citizens based on their location. This means that Ben and Jerry’s can stay and sell to all Israelis, or it can leave Israel, but it cannot boycott only some Israeli citizens or communities without violating Israeli domestic law. While your letter states that “Ben & Jerry’s has also made it clear that although the brand will not be present in the West Bank from 2023, it will remain in Israel through a different business arrangement,” Israeli law makes it clear that there is no scenario under which this could happen.
In light of the foregoing, we expect Unilever to correct its error and use its clear authority under the merger agreement to reverse the Ben and Jerry’s Israel boycott. We look forward to your response and would appreciate hearing from you by close of business on Wednesday, October 20, 2021.
CEO & Co-Founder, StandWithUs