ACCC takes action against alleged laundry detergent cartel
The Australian Competition and Consumer Commission has filed civil proceedings, in the Sydney registry of the Federal Court of Australia, in relation to an alleged cartel that the ACCC alleges denied Australian consumers the benefits of lower prices for laundry detergent products.
The ACCC alleges that Colgate-Palmolive Pty Ltd (Colgate) and PZ Cussons Australia Pty Ltd (Cussons) made and gave effect to cartel and other anti-competitive arrangements. The ACCC alleges that Colgate, Cussons and Unilever Australia Limited (Unilever) entered into arrangements to:
- cease supplying standard concentrate laundry detergents in the first quarter of 2009 and supply only ultra concentrates from that time;
- simultaneously transition their laundry detergents to ultra concentrates which met certain requirements; and
- sell ultra concentrates for the same price per wash as the equivalent standard concentrated products and not pass on the cost savings to consumers.
The ACCC alleges that these arrangements applied across the range of laundry products sold by Colgate, Cussons and Unilever, including popular brands like Cold Power, Radiant and Omo, and had a significant effect on competition in an industry valued at almost $500 million per annum.
Unilever applied for immunity under the ACCC’s Immunity Policy for Cartel Conduct. Unilever has consented to be named as the immunity applicant in this matter.
The ACCC also alleges that Mr Paul Ansell, a former sales director of Colgate, and Woolworths Limited (Woolworths) were knowingly concerned in the alleged arrangements.
“Ultra concentrate detergents are cheaper to produce, store and transport. The ACCC alleges that this offered significant cost savings which, by agreement, were not passed onto consumers. These alleged arrangements also standardised the ultra-concentrate products offered, denying consumers a variety of choices on pricing, package volumes and the strength of the concentrate product,” ACCC Chairman Rod Sims said.
“By way of contrast, when similar products were launched in New Zealand, there was significant discounting, such as offering a larger pack for the price of a smaller pack. The ACCC alleges that the benefits of these competitive actions were denied to Australian consumers”.
The ACCC alleges that, in early 2008, Colgate made a proposal that aimed to achieve an industry-wide transition to ultra concentrates. The transition was executed in the first quarter of 2009. The ACCC alleges that Colgate, Unilever and Cussons simultaneously moved to supply ultra concentrates to the major supermarkets and cease the supply of standard concentrated laundry detergents. The products introduced were twice as concentrated as standard concentrate products.
The ACCC also alleges that Woolworths played a key role in organising the simultaneous transition to ultra concentrates and the introduction of an anti-competitive pricing strategy for the transition. The ACCC alleges that Woolworths was knowingly concerned in these arrangements.
The ACCC also alleges that Colgate and Unilever shared market sensitive information, including information about when they would increase the price of their laundry detergents. The method of information sharing included many instances of telephone contact between Mr Ansell, who was Colgate’s sales director at the time, and senior Unilever executives, including its sales director at the time. In late 2008, Colgate and Unilever implemented price increases across a range of their laundry detergents. The ACCC alleges this information sharing had the purpose, effect or likely effect of substantially lessening competition and controlling or maintaining prices.
Unilever and its relevant employees have been granted conditional immunity from legal proceedings by the ACCC after the company came forward with information about the alleged conduct. The immunity was granted under the ACCC's Immunity Policy for Cartel Conduct, and is conditional upon continuing full cooperation from the company and its executives in providing information to the ACCC about the alleged conduct.
The ACCC is seeking pecuniary penalties, declarations, injunctions, compliance programs and costs against Colgate, Cussons, Mr Ansell and Woolworths.