Household products company Colgate-Palmolive has been hit with one of the biggest fines in Australian corporate history after pleading guilty to being part of a cartel involving laundry detergent.
The $18 million decision also has serious ramifications for the struggling retailer Woolworths and Cussons, which both face court in June over the issue.
Colgate was ordered to pay a total of $18 million in penalties by the Federal Court for controlling the supply and price of laundry detergents in a cartel that also allegedly involved Woolworths, Cussons and global giant Unilever.
The company is responsible for some of Australia’s best known laundry brands, including Dynamo, Cold Power, Fab and Spree.
The Australian Competition and Consumer Commission (ACCC) took the group to court in 2013 over actions in the first quarter of 2009.
The ACCC alleged that as part of the deal, the companies agreed to end the supply of standard concentrate laundry detergents and only supply ultra concentrates, selling them for the same price per wash as the equivalent standard concentrated products, but failing to pass on cost savings to consumers.
Colgate admitted it shared sensitive market information with Unilever, including when they would increase the price of laundry detergents.
Unilever applied for immunity under the ACCC’s immunity policy for cartel conduct. Colgate admitted to being part of the deal with Unilever Australia and PZ Cussons Australia and then agreed with the ACCC to joint submissions on a penalty.
Colgate’s fine consists of $12 million for the understanding to withhold supply, $6 million for the information sharing understanding, plus another $450,000 towards the ACCC’s costs.
The company’s former sales director, Paul Ansell, was disqualified from managing corporations for seven years and will pay $75,000 towards the ACCC’s costs after admitting his involvement.
ACCC chairman Rod Sims said Colgate was handed the equal third largest penalty the court has ordered for breaches of competition law and based on the company’s turnover.
“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,” he said.
“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.”
The ACCC also has cases against Cussons and Woolworths listed for hearing in June 2016.