Cosmetic giants fined due to 'anti-competitive information sharing'

By Michelle Yeomans

- Last updated on GMT

Cosmetic giants fined due to 'anti-competitive information sharing'

Related tags Cartel

Germany’s Federal Cartel Office has announced it has just completed an ‘antitrust’ suit against cosmetic giants like Beiersdorf,  L'Oréal and Procter & Gamble for anti-competitive information sharing.

According to Andreas Mundt, President of the cartel or 'Bundeskartellamt'; "Leading brand manufacturers had in the course of official association meetings for years about upcoming price increases, exchanged new discount demands of retailers, on the status and progress of negotiations with retailers.​”

These are relevant to competition information, the exchange is prohibited by antitrust authorities. The competition is affected by such behavior, even if it is not is classic price-fixing or other hardcore cartels​," he adds, explaining why the fines have been implemented on the brands.

Competition regulator

The Authority acts as a national competition regulator that today administers competition law and is basing the suit on exchanges of information between 2004 to 2006 involving Germany's leading suppliers of branded products in the areas of personal care, detergents and cleaning agents.

It notes that between 2008 and the end of 2011, nine fines totaling around 24 million euros have already been imposed on the German subsidiaries of Coty, Dr. Krauss and Dr. Beckmann, Johnson & Johnson, Schwarzkopf & Henkel GmbH, Reckitt Benckiser, and Unilever. 

And that now a further 39 million will be imposed on Beiersdorf,  L'Oréal and Procter & Gamble and Gillette and their brand managers.

Even against the brand Association for supporting the exchange of information, a fine was imposed.”

According to the Federal Office, the penalty notice is already in force. However in regards to Beiersdorf, an amicable termination method (so-called settlement) has been achieved.

All other companies and individuals affected may file an appeal against the decisions with the Düsseldorf Higher Regional Court.

Anti-competitive practices

The following can be defined as anti-competitive practices :

  • Dumping, where a company sells a product in a competitive market at a loss. Though the company loses money for each sale, the company hopes to force other competitors out of the market, after which the company would be free to raise prices for a greater profit.
  • Price fixing, where companies collude to set prices, effectively dismantling the free market.
  • Refusal to deal, e.g., two companies agree not to use a certain vendor.
  • Dividing territories, an agreement by two companies to stay out of each other's way and reduce competition in the agreed-upon territories.
  • Limit Pricin, where the price is set by a monopolist at a level intended to discourage entry into a market.
  • Tying, where products that aren't naturally related must be purchased together.
  • Absorption of a competitor or competing technology, where the powerful firm effectively co-opts or swallows its competitor      rather than see it either compete directly or be absorbed by another firm.

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