A Federal Court decision yesterday hit multinational Colgate-Palmolive with the third-largest penalty for cartel behaviour in Australian history for conspiring with two rival producers and Woolworths to fix the price and supply of a new type of laundry detergent.
Colgate was ordered by the Federal Court to pay $18 million in penalties after it admitted entering agreements that limited the supply and controlled the price of laundry detergents. It will also pay $450,000 of the ACCC’s costs and engage in an updated three-year trade practices compliance program.
The commission started the action against Colgate and competitors, Unilever and Cussons, in December 2013, alleging that Colgate, Cussons and Unilever had engaged in cartel conduct, along with supermarket giant Woolworths. The three multinationals and Woolies were accused of colluding to simultaneously switch the supply of laundry detergents to ultra-concentrates and stop selling standard concentrates in 2008-09. Unilever self-reported the cartel behaviour to the ACCC and got a discount. Colgate co-operated with the commission and had the size of its potential penalty reduced.
The commission said that all four parties stood to profit because ultra-concentrates detergents were cheaper to make, store and transport compared with standard concentrates. They agreed to not pass on savings to consumers. Colgate also admitted its executives had shared sensitive market data with senior Unilever executives, including when they would lift prices. Affected brands include Cold Power, Radiant and Omo.
The commission’s case against Cussons and Woolworths is listed for hearing in June. The regulator is seeking pecuniary penalties, declarations, injunctions, compliance programs and costs. Will we see the duo attempt to settle having seen the size of the penalty levelled against Colgate? The action against Woolworths is bad news for the struggling retailer (which reveals its third-quarter sales performance next week). The ACCC launched legal action in the Federal Court alleging unconscionable conduct by Woolies in 2014 in bullying around 800 mid-tier suppliers to help fill a $50 million gap in its half-year profit projections. The commission’s claims in this case were outlined in court documents lodged with the Federal Court last December.
The Australian Financial Review failed to find room for the story in this morning’s edition. Fairfax stablemate The Sydney Morning Herald ran the story on page 3, so its editors knew a good news story when they saw the ACCC statement, which was issued around 2.55pm yesterday. The AFR can’t argue early deadlines for this one! What makes the silence of the AFR even more galling is that this cartel behaviour forced Australian consumers pay more for what looks like a significant improvement in concentrate technology, thereby increasing their cost of living. And yet they go into a confected rage about “nasty” trade unions and their impact on building costs. I can’t see the difference.