AGCM

PRESS RELEASE

COSMETICS: ANTITRUST AUTHORITY FINES 15 FIRMS FOR COMPETITION-RESTRICTING BEHAVIOUR.
FINES OF OVER 81 MILLION EUROS IMPOSED ON FIRMS WHICH COORDINATED LIST PRICE INCREASES SENT TO MASS RETAILERS. ASSOCIAZIONE CENTROMARCA ALSO FINED.

Fines for Unilever Italia Holdings, Colgate-Palmolive, Procter&Gamble, Reckitt-Benckiser Holdings (Italia), Sara Lee Household & Body Care Italy, L'Oreal Italia, Società Italo Britannica L.Manetti-H.Roberts & Co, Beiersdorf, Johnson & Johnson, Mirato, Paglieri Profumi, Ludovico Martelli, Weruska&Joel, Glaxosmithkline Consumer Healthcare, Sunstar Suisse and Associazione Italiana dell’Industria di Marca (Italian Association of Branded Products Industries) – Centromarca.
Exemption from the fine for Henkel, which reported the agreement, and reductions for Colgate-Palmolive and Procter&Gamble of 50% and 40% respectively for abiding by the leniency programme with independently submitted evidence after Henkel reported itself.

The Autorità Garante della Concorrenza e del Mercato (Italian Competition Authority), during its meeting of 15 December 2010, has decided that the 16 cosmetics manufacturers, which include all of the industry’s major firms, put into effect a single, complex, ongoing agreement designed to coordinate list price increases communicated annually to operators in the Mass Retail sector. Associazione Italiana dell’Industria di Marca (Italian Association of Branded Products Industries) – Centromarca  was also party to the agreement by significantly facilitating the coordination of commercial strategies between cosmetics manufacturers, constantly guaranteeing them an operation of support, logistics and information.
The ‘cartel’, which was identified thanks to the self-reporting of the multinational firm Henkel, which thus benefited from exemption from the fine, was created through a constant, pervasive exchange of information regarding the main competition variables: from increases in list prices of personal care products (such as soaps, detergents, perfumes, creams and toothpastes) to conditions of negotiation with retail operators. The results was a generalised, constant alignment of increases in the list prices communicated to operators in Mass Retail (GDO), normally higher than the annual rate of inflation.
The investigation conducted by the Antitrust Authority found several pieces of evidence to support the initial declarations made by Henkel and subsequently by Colgate-Palmolive and Procter&Gamble, which asked to be admitted to the leniency programme, obtaining, respectively, a 50 and 40 per cent reduction of the fine at the end of the investigatory proceeding.
According to the Antitrust Authority’s reconstruction of the facts, the meetings organised by Centromarca’s ‘Chemical Group’ generally began with the presentation of an industry analysis of general market trends, which was followed by a “round-table” discussion in the true sense of the term in which each manufacturer was called upon in turn to state the average percentage increase in list prices communicated and/or to be communicated to Mass Retail operators and the main commercial information that emerged during annual negotiation with them (in particular with reference to the percentage discount requested).
Such constant coordination between competing manufacturers also went on outside the context of the association with ongoing, direct contacts coming to light during the investigation. The objective agreed – and achieved – was an annual list price increase above the annual rate of inflation and totally disconnected from corresponding increases in production costs. The agreement, which lasted at least from 2000 until 2007, was put in place by firms which for each category of goods in the sector of personal care products together possess an aggregate share ranging between 58% and 92% of sales in value terms.
In establishing the fine the Authority took into account, among other things, both the leading role played by a number of firms (in addition to Henkel, Reckitt Benckiser, Beiersdorf, L’Oreal, Unilever, Procter&Gamble, Colgate and Manetti&Roberts) in drawing up the price collusion plan and, in mitigation, cooperative behaviour on the part of Reckitt, Mirato and Associazione Italiana dell’Industria di Marca (Italian Association of Branded Products Industries).
The following table shows the fines imposed, firm by firm:

Rome, 15th December 2010