The Federal Court has ordered Colgate-Palmolive to pay the penalties after it admitted entering into agreements that limited supply and controlled the price of laundry detergents – actions in contravention of Australian consumer law.
The personal care and cleaning products giant is the maker of laundry detergent brands including Cold Power, Dynamo and Fab.
The Australian Competition and Consumer Commission (ACCC) launched Federal Court action against Colgate in December 2013, alleging that it, Cussons and Unilever had engaged in “cartel conduct” along with supermarket chain Woolworths.
It’s reported the plan involved reducing the size of packets but keeping prices the same.
The court described the conduct as serious and the penalty as significant but proportionate. It is the equal third largest penalty the court has ordered for breaches of this kind.
“By ordering these substantial penalties, the court has recognised the seriousness of this conduct, which affected the supply and pricing of laundry detergents, a consumer staple,” said ACCC Chair Rod Sims.
“The information sharing understanding involved phone calls between senior managers of competing companies, many of which started as social calls, but turned to unlawful exchanges of pricing information. Any contact between competitors carries risk and while discussion of price is particularly serious, there are many topics which may lead to an anticompetitive understanding.”
Specifically, Colgate admitted that it made, and gave effect to, an understanding with Unilever and Cussons whereby they agreed to cease supplying standard concentrate laundry detergents in early 2009 and supply only ultra concentrates from that time.
Cussons produces laundry detergent brands such as Radiant and Duo, while Unilever brands include Persil, OMO and Surf.
Colgate also admitted that it and Unilever shared sensitive market information, including details about when they would increase the price of their laundry detergents.
Woolworths and Cussons both face court in June over the issue.
According to the Herald Sun, Unilever “blew the whistle on the rort” in 2011.
The penalties ordered against Colgate comprise $12 million for the understanding to withhold supply and $6 million for the information sharing understanding.
The ACCC has also, by consent, resolved its proceedings against Mr Paul Ansell, a former Colgate sales director, who has admitted to being knowingly concerned in the same conduct.
By consent, the court also ordered that Mr Ansell be disqualified from managing corporations for seven years and pay a contribution of $75,000 towards the ACCC’s costs.
The Federal Court also made other orders by consent that Colgate update its trade practices compliance program and pay a contribution of $450,000 towards the ACCC’s costs.