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Clarins receives fine for price fixing

By staff writer , 09-Feb-2007

Upmarket beauty player Clarins has received a €500,000 fine from the French Conseil de la Concurrence (Competition Council) after being found guilty of price-fixing between 1997 and 2007.

Clarins have refused to comment to members of the press with regards the subject, but has been given the opportunity to lodge an appeal with the Court of Appeals.

The Conseil de la Concurrence began investigating price-fixing of prestige fragrances in France in 1998, culminating in a decision to fine 13 fragrance- and cosmetic-makers, together with three distribution companies that specialized in luxury goods.

 

In March last year the Commission fined the 13 fragrance brands and three distributors a total of €46.2m after it found them guilty of breaching anti-competition agreements.

 

Compared to the other fragrance brands involved in the investigation, Clarins fine was far less, reflecting the fact that the investigation deemed its involvement in the price-fixing to be far less than the others.

 

Clarins currently markets par Amour and par Amour Toujours in the luxury fragrance segment.

 

According to the Commission, each of the brands entered into an agreement with its distributors, ensuring that every product was retailed at a single price, eliminating any possibility of competition amongst retailers.

 

The biggest fines went to the three distribuotors: Marionnaud, which was fined €12.8m; Sephora, which was fined €9.4m and Nocibe, which was fined €6.2m. The Commission said that the fines reflected the gravity of the individual businesses' involvement in the cartel.

 

Amongst the fragrance brands, the biggest fine went to LOreal, which was ordered to pay €4.2m, while Chanel and Christian Dior were ordered to pay €4.1m and €2.2m respectively, Yves Saint-Laurent €1.8m, Guerlain €1.7m and ELCO, which represents Clinique and Estee Lauder, €1.6m.

 

Other leading fragrance brands that were fined included Shiseido France, Givench, Beaute Prestige, which represents Jean-Paul Gaultier and Issey Miyake, together with Kenzo Parfums.

 

The Commission referred to the price-fixing as a pricing control system that involved "checks on the prices practised, and pressure and threats of commercial retaliation against any distributor who refused to apply the prices imposed by the brand, preferring to let competition play by selling at lower prices."

 

At the time, it also pointed out that although luxury brands are permitted to exercise a certain amount of control over the distribution of their products at retail outlets, the case in question had made it clear that selected distributors were not able to fix the margins, and therefore its own retail price.

 

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