Italian authorities investigate leading cosmetics firms

By Guy Montague-Jones

- Last updated on GMT

Related tags Federal cartel office Cartel Sara lee L'oréal Henkel

Italy's competition authority has launched an investigation into
some of the world's largest cosmetics companies over price-fixing

The Italian divisions of L'Oreal, Henkel, Unilever, Proctor & Gamble, Sara Lee and Reckitt Benckiser are all suspected of colluding to restrict competition in the cosmetics market.

Information sharing and price-fixing The regulator AGCM said it had received a tip-off that the companies had exchanged information about planned price increases and negotiations with distributors.

The multinational firms were also accused of using this new knowledge to club together and obtain a general price increases.

According to the complaint, the consequences of their actions for new market entrants were also discussed.

The Italian authorities received the accusations under the programme of clemency provided by law and will be investigated over the coming months.

The process must be wound up later than 12 June, 2009.

Cartel receives hefty fine

The case bears the hallmarks of a cartel uncovered by the German anti-trust authorities earlier in the year.

The country's Federal Cartel Office fined Sara Lee, Unilever and Henkel a total of €37m for colluding to artificially increase the prices of shower gel, toothpaste and dishwashing liquid.

They were also accused of keeping each other informed about their actions and the moves of retailers.

Their anti-competitive behavior came to light only when one of the cartel members, Colgate-Palmolive, spilled the beans to the authorities.

The company escaped a fine despite its involvements thanks to the country's clemency policy.

In another cartel case in March 2006, the French Conseil de la Concurrence fined the 13 fragrance brands and three retailers €46.2m after finding them guilty of breaching anti-competition agreements.

Leading companies were again involved in price-fixing agreements including Guerlain, L'Oreal and Marionnaud.

How widespread anti-competitive behavior is in the cosmetics industry is difficult to establish but it appears likely that other cartels are currently in operation.

Price fixing often characterises markets that are dominated by a small number of large firms eager to profit from their dominant market position.

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