Unilever and P&G fined €300m for price-fixing
Thursday 14 April 2011
European regulators have ordered Procter & Gamble, the maker of Tide, Gain and Era washing power brands, and Unilever, whose brands include Omo and Surf, to pay fines totalling more than €300m (£267m) for their part in a cartel that fixed detergent prices across eight European countries.
In a settlement, the two companies acknowledged fixing prices along with Henkel, the German consumer goods group, which escaped penalties by blowing the whistle on the arrangement in 2008. The cartel existed for at least three years between January 2002 and March 2005, fixing prices of powder detergents for washing machines in Belgium, France, Germany, Greece, Portugal, Spain and the Netherlands.
"The cartel started when the companies implemented an initiative through their trade association to improve the environmental performance of detergent products," the European Commission said in the settlement published yesterday.
"The environmental objective, however, did not require them to co-ordinate prices... Henkel, Procter & Gamble and Unilever did this on their own initiative and at their own risk."
The total fine of €315.2m – €104m for Anglo-Dutch company Unilever and €211.2m for P&G of the US – includes a 10 per cent reduction for acknowledging the facts. The final figures also reflect a 50 per cent reduction for P&G and 25 per cent for Unilever on account of their co-operation with regulators under the EU's leniency notice.
Henkel, which owns the Persil brand across many European countries, said it first got wind of the cartel arrangements during compliance audits in 2008 and "immediately informed the authorities and contributed substantially to clearing up the issue".
"In 2008, we had to acknowledge concrete evidence of misconduct by employees in several Western European countries," Henkel's compliance chief, Dirk-Stephan Koedijk, said. "For us, living in corporate compliance means actively dealing with this issue. This is why we have intensively investigated internally and have made our findings available to the authorities promptly in an unrestricted manner."
Unilever said it had used the findings of the investigation to strengthen its compliance programme, and retrained all key managers in Europe on the continent's competition rules. The consumer goods giant added that the fine fell within provisions made in its results. P&G also said that it had made "appropriate financial reserve" for the fine and had "already strengthened" its compliance programme.
The Commission has powers to fine companies up to 10 per cent of their annual turnover in these cases.
Top 5 European cartel fines
Saint Gobain – €896m
The French group was fined €896m in 2008, the biggest individual penalty in an EU cartel case, following a probe into a market-sharing cartel between car-glass producers. In all, the Commission fined Saint Gobain, Asahi, Pilkington and Soliver a total of nearly €1.4bn, the biggest fine in a European cartel case.
E.ON and GDF Suez – €553m each
The energy giants, two of the biggest players in the European gas industry, faced penalties of €553m each in 2009 for market sharing in the French and German gas markets. The case saw the European Commission impose its first penalties for antitrust infringement in the energy sector.
ThyssenKrupp – €480m
In 2007, fines of €992m were levied on members of cartels covering the installation and maintenance of lifts and escalators in Belgium, Germany, Luxembourg and the Netherlands. Of the total, the German group ThyssenKrupp faced a penalty of nearly €480m for its part in the arrangements.
F. Hoffmann-La Roche – €462m
The Swiss pharmaceuticals group was fined €462m in 2001 when the European Commission penalised eight companies for participating in various market-sharing and price-fixing cartels affecting vitamin products. Roche faced the biggest penalty in the case as it was "an instigator and participated in all the cartels", the EC said at the time, characterising the company as "the prime mover and main beneficiary" of the various schemes.
Siemens – €396m
The German engineer was fined over €396m for participating in a cartel for gas-insulated switchgear projects. Handing down the penalties in 2007, the Commission said cartel members had employed "sophisticated measures to keep their communications secret", including using code names for companies and individuals.
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