The text of decision No 11-D-17 initially published on the Autorité de la concurrence’s website included a material error regarding the amount of the financial penalty imposed on Procter & Gamble (see the first page of decision No 11-D-17 of 8 December 2011 relative to practices implemented in the laundry detergent sector).

The below press release was thus modified on 20 December 2011:
- the financial penalty on Procter & Gamble amounts to €240.24 million and not €233.56 million.
- the total amount of financial penalties is €367.9 million and not €361 million.
 

The Autorité de la concurrence fines a cartel between the four major laundry detergent manufacturers
 a global amount of €367.9 million.

Unilever, who first disclosed the cartel, obtained full immunity from fines.

> Version française

The Autorité de la concurrence today issues a decision by which it fines a cartel between the four laundry detergent manufacturers active in France – Unilever, Procter & Gamble, Henkel and Colgate Palmolive – a total amount of €367.9 million. The companies coordinated their commercial strategies through a common determination of sale prices and promotions towards the French retail grocery sector (supermarkets and hypermarkets).

All product categories of the major laundry detergent brands which are available in France, like Ariel, Skip, Le Chat, Dash, Omo, Super Croix, Gama, Persil and X Tra, fell within the scope of the cartel agreement, which lasted between 1997 and 2004 – with an interruption between October 1998 and November 1999. All the product formats (powder, liquid and tablets) were included in the agreement.

Today’s decision concerns the most important leniency case investigated until now by the Autorité. Moreover, it is the first time, in France, that a leniency case concerns a mass-market product1. It has also to be noted that all the parties involved in the cartel decided to cooperate with the Autorité, in the framework of the French leniency programme.

In 2008, Unilever disclosed the existence of the cartel to the Autorité de la concurrence

Following a legal audit which was conducted within his company in 2006, a Unilever employee disclosed to the legal department a document of 283 pages – that he was keeping at home –, which stated an anticompetitive agreement between the four detergent manufacturers (Procter & Gamble, Unilever, Henkel and Colgate-Palmolive), covering prices and promotions. In March 2008, Unilever – which had been inspected under an investigation on anticompetitive practices regarding other products – submitted a leniency application to the Autorité de la concurrence. The leniency procedure allows, under certain conditions, to grant full or partial exemption from fines – depending, in particular, if its order of arrival – to a company that disclosed the existence of an anticompetitive agreement in which it took part.

Thereafter, between 2008 and 2009, the three other major laundry detergent manufacturers (Henkel, Procter & Gamble and Colgate-Palmolive) successively submitted to the Autorité their own leniency applications (see File N°1 : the leniency programme).

Between 1997 and 2004, and several times a year, the four manufacturers held secret talks on their pricing and promotion policies, which took place in hotels and restaurants

Commercial directors of the French subsidiaries met together three or four times a years to agree on the prices and promotions that they would subsequently offer, individually, to hypermarkets and supermarkets. These talks, during which price schedules were exchanged, took place in Parisian hotels and in restaurants of the West Paris area (Marne-la-Coquette and Louveciennes).

On some charts, the Autorité noted that cartel participants typed a code name: “Hugues” for Henkel, “Pierre” for Procter & Gamble, “Laurence” or “Louis” for Lever (Unilever) and “Christian” for Colgate. These meetings were kept secret and some participants called them “store checks”. When negotiations were stalling or when the agreed rules were not observed, CEOs and managing directors of the French subsidiaries of these groups might have to intervene during a meeting.

A large-scale and widespread anticompetitive agreement

At regular intervals, the prices for each reference, brand and product format (powder, tablets and liquid) were determined between the four manufacturers. The aim was to stifle competition and to “stabilize the market”, by avoiding any “price war” on the French market.

  • The agreement on prices

Talks between cartel members first focused on the price differences that had to be maintained between the different brands, within each segment (high-end, mid-range and low-end). Then, all price increases planned by detergent manufacturers on the French market were the subject of a common negotiation, in order to preserve the positioning of the different brands (for more details, refer to §151 et seq. of the decision).

Table: price differences agreed between detergent brands

 
Unilever
Henkel
Procter & Gamble
Colgate Palmolive
Pricing agreement implemented
Regular detergents
High-end products
Skip
Le Chat
Ariel
Mr Propre*
Vizir
 
Ariel: 3% more expansive
vs
Skip and le Chat (aligned prices)
 
Mid-range products
Omo
Super Croix
Dash
[Axion until 2003]**
Dash: 10% more expansive
vs
Omo, Super Croix and Axion (aligned prices)
 
Low-end products
Persil
X Tra
Gama
Bonux
[Gama until 2003]**
Aligned price levels for all brands

*The laundry detergent Mr Propre brand had been launched end of 2004 and was terminated in 2006.
**End of 2003, Colgate Palmolive transferred its assets in laundry detergents in France to Procter & Gamble

  • The agreement on promotions

Cartel members also coordinated their promotion policies on the French market. “Promotion rules” were putting limits on the promotions that cartel members could offer: format, schedule, amount, number per year, advertising, etc. Many parameters were jointly determined in this way, product by product.

E.g. in 2003, the extras consisting of a free product were “prohibited” by the agreement, thus impeding in practice any kind of “two-for-one” special offer. Similarly, promotional discounts were capped at a level depending on the size of the product: 15% for a 45 doses package, 18% for a 54 doses package and 20% for package of more than 54 doses (for more details, refer to §205 et seq. of the decision).

  • The monitoring of compliance with the cartel rules

In order to secure the full observance of the cartel rules, every manufacturer watched the promotional leaflets disseminated by supermarkets and hypermarkets or asked his sales teams to provide a price reporting. The aim was to check if prices displayed in shops and promotions were in line with the cartel decisions.

By taking advantage of the Galland Law, such practices had a direct impact on retail prices paid by consumers

Laundry detergents represent a significant part of households’ spending and grocery retailers use them to attract consumers’ attention. The widespread collusion on the laundry detergent sector enabled manufacturers to restrict competition in this sector in France during almost 6 years2, by maintaining prices paid by consumers at higher levels than those that would have resulted from an undistorted competition.

On the downstream market, the Galland Law favoured aligned price levels in supermarkets and hypermarkets. Indeed, this law forbad retailers to sell products at a price below the purchase price, eventually taking into account the invoice rebates offered by their suppliers. By paying the retailers exclusively through hidden margins (“marges arrières”), suppliers took profit of this loss-leader threshold to settle a floor price system and to control retail prices (for more details, refer to File No2).

The Autorité imposed financial penalties for a total amount of €367.9 million

To set the level of financial penalties, the Autorité de la concurrence implemented the legal criteria (seriousness of the facts, importance of the harm done to the economy, situation of the sanctioned undertaking or of the group to which it belongs). In this case, it took into account the particular seriousness of the practices as well as the various aspects of the harm that these practices have done to the economy. This harm is undoubted, even if mitigated by some elements that are noted in the Autorité’s decision. The amount of the financial penalties also takes into consideration the fact that the concerned companies or groups operate worldwide, have diversified business areas and dispose of significant resources.

The Autorité detailed, at each step, the method that was followed to calculate the financial penalties, in accordance with the Notice on the Method Relating to the Setting of Financial Penalties that it published on 16 May 2011 (link to the full document, in its English version) and which was implemented in this case, for the first time.

At the end of his assessment, the Autorité granted exemptions or reductions in fines, in accordance with the French Leniency Programme (for more details, refer to File N° 1 on the leniency procedure). For being the first company to apply for leniency, Unilever was not fined. Having fulfilled the conditions required to benefit from leniency, Unilever was exempted from a €248.5 million fine. Based on the added value of the pieces of evidence that they had provided – which itself depends on the order of arrival when submitting their leniency applications – and on the cooperation that they demonstrated during the whole inspection and investigation phases, the other companies (Henkel, Procter & Gamble and Colgate-Palmolive) have respectively benefited from a 25%, 20% and 15% reduction of fine.

The final amounts of financial penalties are:
Unilever: 0
Henkel: €92.3 million
Procter & Gamble: €240.24 million
Colgate Palmolive: €35.4 million

1- The four previous leniency cases investigated by the Autorité concerned intermediary markets or relatively specific goods: steel products trading (08-D-32), production of plywood (08-D-12), national and international removal services (07-D-48), door manufacturing (06-D-09).
2- Following a new commercial policy decided by Proter & Gamble, the cartel was temporarily interrupted between October 1998 and November 1999.



This press release translated into English is for information purposes only. Only the Decision 11-D-17 in French is deemed authentic.

For more details on this case, please refer to the full text of Decision 11-D-17 relative to practices implemented in the laundry detergent sector and to the press kit:
File N°1: The leniency procedure
File N°2: Mechanisms introduced by the Galland law
File N°3: Some figures on the laundry detergent sector
File N°4: Differences between the French case and the case recently investigated by the European Commission in the laundry detergent sectors 
 

Press contact: André Piérard / Tel.: (+33) 1 55 04 02 28 / Contact by email




> See decision of the Paris Court of Appeal (30th January 2014)