French authorities fine fragrance makers for cartel

By Simon Pitman

- Last updated on GMT

Related tags Lvmh

The French Competition Commission has fined 13 leading luxury
fragrance brands and three retailers a total of €46.2m after it
found them guilty of breaching anti-competition agreements .

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 L'Oreal, 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 said that it found the fragrance companies had all entered into agreements with the national retail chains between 1997 and 2000 with the express purpose of putting a stop to any competition between retailers for each of the brands' products.

Luxury brand owner giant LVMH was hit hardest, as it owns both the Sephora retail chains, together with the four brands, Guerlain, Kenzo, Christian Dior and Givenchy.

Although the fragrance brands have remained silent over the fines, both for legal reasons and to protect their positions, a number of vendors have spoken out against pressure to keep fragrance prices high.

A shop in Lyons was quoted as saying of Christian Dior, "The threats were clear. If we sold for more than 10 per cent under the recommended price, Dior would cut the brand out."

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."

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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