Household and personal care product suppliers face record fines for price-fixing in France

Personal care brands such as Proctor & Gamble, Colgate-Palmolive, Henkel and Unilever have been fined 605.6 million euros by French authorities over price-fixing schemes.

The French Competition Authority (FCA) issued the fine, the highest it has ever issued, after finding the companies guilty of price-fixing schemes, which occurred between 2003 and 2006 and involved a total of 13 companies. The investigation began after the FCA received a tip-off from whistle-blower, UK-based household care brand, SC Johnson.

The companies involved in the scheme were found guilty of coordinating their commercial policies prior to negotiating contracts with distributors in a concerted effort to restrict competition. As a result, the prices charged to the distributors were maintained at an artificially high level, at the expense of consumers.

The FCA found that in 2006, the participants in the personal care products scheme pulled off a 4% to 6% price increase in France, while in other European countries the increase in the prices charged by the same manufacturers to their distributors was estimated to range from 1% to 2.5%.

Products involved in the personal care price-fixing scheme included household names such as Elseve, Head & Shoulders, Signal, Colgate and Gillette.

L’Oreal was the most heavily fined company as it openly challenged the FCA’s findings whereas companies that provided information and cooperated with the investigation saw their fines reduced by 16-18 percent.

The schemes also included exchanges of information related to non-contractual commercial policies, such as the harmonization of promotional events held by the participant companies.

The FCA investigation found that in order to exchange information, the participants in the schemes, mostly directors and heads of sales, would secretly meet on a regular basis in the private room located in the basement of a Paris restaurant, and then telephone one another or exchange correspondence using their home addresses.

Similar price-fixing schemes were found to be taking place in the household markets, involving products such as Paic and Palmolive detergents, or the Sun and Calgonit dishwasher tablets, leading to fines of 345.2 million euros.

The FCA stated that the fines were proportional to the size of the respective markets in France. They were also said to reflect the complexity of the schemes and the essential, everyday nature of the products involved which were sold nationwide.