First up, there are the price fixing cases.

In January2002, Unilever, Procter and Gamble and German company Henkel, agreed to fixprices on detergents for three years. Unilever and Procter and Gamble werefines over 300 Mn Euros while Henkel got out for ratting them out. Did Unileverlearn their lesson though? Not really. They are on trial again, this time inSouth Africa, this time for price fixing with a big Malaysian conglomerate SimeDarby.

The watchdog handling this case wants 10% of their local turnover as afine. On an ecological level, Unilever have played a role onthe devastating impact that palm oil has had on the environment. Indonesia islosing 2% of its rain forest every year with palm oil production being the maincause for that which coincidentally involves many of Unilever’s suppliers.

In2016 they had to set away allegations that they had poisoned 100 of Indianworkers with mercury and the list of controversies goes on and on.  PriceFixingFor almost adecade, executives from FMCG giants like Procter & Gamble Co. secretly metin discreet restaurants around Paris, purportedly to fix the price of laundrydetergent in France. P and its rivals were indicted of fixing detergentprices in France. The Autorite? de la Concurrence slapped fines for a total of €360Mn ($485 Mn) on P, Henkel AG and Colgate-Palmolive Co. for colluding toset the price of soaps in France between 1997 and 2004. The French regulator listedwhat it called a scheme that jacked prices for consumers before finally fallingwhen the group’s interests differed.

The French authority said in its reportthat the companies used aliases to hide their identity at meetings:”Hugues” for Henkel, “Pierre” for P&G and”Christian” for Colgate-Palmolive. Unilever PLC—which went by the name”Laurence”—was not fined, because it was the first company whichagreed to comply with the investigators and it received immunity for the same.The company said it is dedicated to following with all laws.

Colgate said it,too, cooperated with French authorities in their investigation and is reviewingthe judgment. Henkel, Germany is planning to appeal, saying it considers thefine disproportionate given its full cooperation with the investigation. The fine representsone of the largest set by French antitrust authorities and represents thelatest in a long list of cartel-busting efforts by members of the EuropeanUnion. In April the European Commission said that P&G, Unilever and Henkeltook part in anticompetitive practices in the detergent market from 2002 to2005 in 8 European countries. The 177-pagereport details the lengths to which the companies went to carry out theirdetailed price-fixing plan. Managers from the three companies met as early asthe 1980s to share price information, the antitrust authority said.

Accordingto a statement a Henkel manager made to the commission, the companies wanted”to limit the intensity of the competition between them and clean up themarket.” Even so, by the early 1990s, a price war had broken out amongthem. In 1996, four brand directors met in the restaurant La Te?te Noire in thewestern outskirts of Paris. The aim was to make sure that they pitched their detergentsto supermarkets at determined and agreed prices and notified each other of anyspecial offers, the antitrust authority said. They allegedly took turnschoosing spots for the clandestine meetings, which occurred multiple timesannually. To ensure that very few people actually knew what was going on, thosewho attended the meetings—dubbed the “Store Checks”—took the checkshome with them and expensed the same under different aliases.

During themeetings, which sometimes lasted as long as eight hours, the groups discussedcomplex pricing mechanisms. For example, P&G marketed its Ariel laundrybrand as geared towards the premium market, and so it fixed an agreement tomake sure Ariel remained at least 3% more costly than Unilever’s Skip brand.Several rules were written had to be abided by.The concept of buy-one-get-onewas no longer going to be used and the companies agreed that no one will use itas they would eat into its profits and undermine the effort that was beingtaken with respect to price fixing. Cost savings, such as from more-concentrateddetergent, would not be passed on to customers. Promotions for adding extraquantity free were also restricted. The group was helped by a French law thatmakes it illegal for shops to sell products below cost. As a result, the endconsumer was the one that had to bear all such resulting increases in cost measuresand had to bear the full brunt of it without any competitive subsidies.

According to oneanonymous Unilever employee, the companies stood by their words and rarelybroke the tacit understanding between them. “They were aware that therehad already been price wars and they didn’t want to revive them.” Yetwhile fixing prices proved relatively simple, monitoring special offers wasproving to be a complicated task. One executive recalled unorganised anddysfunctional meetings as each side tried to work out how the other had bentthe rules. By 2004, the scheme began to fall apart.

The companies disagreed onprice increases and promotions. Unilever was the first to break the unwrittenrules, launching a June month deal of marginal discounts. At the end of theyear, P responded by slashing the price on its entry-level Gama detergentby 25%. At the beginning of 2005, Henkel fired back with 40% off one of itsdetergents. Shortly thereafter, both Unilever and P rolled outbuy-one-get-one-free deals. P was fined€233.6 Mn, Henkel €92.

3 Mn and Colgate €35.4 Mn. P said the larger finewas a representation of its large business volume in the country of France.

After its own investigation, the European Commission fined P €211.2 Mnand Unilever €104.0 Mn in April. Henkel wasn’t fined, because it alerted thecommission to the cartel and received immunity. This spooked Unilever, which in2008 handed over a 283-page report to French antitrust authorities. Thereport—which an employee had stashed at home — included detailed charts of theprice fixing and the code names of the participants. In exchange Unilever wasgiven clemency and was not given any monetary fines.

 

x

Hi!
I'm Katy!

Would you like to get a custom essay? How about receiving a customized one?

Check it out