Perfume houses cleared of unfair pricing policy

LEADING perfume suppliers have been cleared of keeping prices unfairly high by the Monopolies and Mergers Commission. It said that a complex monopoly exists in the fine fragrance market but it does not act against the public interest.

The Office of Fair Trading asked for a commission inquiry after complaints by some companies, including Superdrug and Tesco, that they were being refused supplies by certain fragrance houses that operate 'selective' distribution policies.

The aggrieved high street retailers were in some cases selling perfumes - at a discount of up to 30 per cent - obtained from the 'grey market', but wanted to become authorised outlets.

The Office of Fair Trading was concerned that selective restrictions operated by manufacturers might mean lack of effective competition and that the constraints might be used to maintain high retail prices.

However, the commission report said: 'Fine fragrances are marketed as luxury products and the MMC accept that the suppliers need to be able to control their distribution in order to protect their brand images which customers evidently value.

'There is no shortage of other fragrances at much lower prices . . . The market is competitive and the MMC conclude that the suppliers' selective distribution systems as a whole are not operating against the public interest.'

The Consumers' Association said that the commission's conclusion 'beggars belief' and gives the perfume manufacturers carte blanche to charge artificially high prices. Meanwhile, Superdrug said that the report is a 'kick in the teeth for consumers' and promised to take its battle to Brussels.

The association said: 'Consumers will continue to pay through the nose. The MMC has swallowed the perfume companies' argument hook, line and sinker. It is an inconsistent, incoherent and badly argued report.'

It added that consumers pay at least 20 per cent more than necessary and that if there was true competition, perfume prices would plummet.

Manufacturers of luxury perfumes have argued that they need to choose retail outlets where the ambience and layout as well as service and advice provided fits with the image of the product being sold.

Superdrug said it would continue to sell products obtained on the grey market. The company also vowed to continue heavy discounting in selling to the public.

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