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EU Fines P&G, Unilever Over Laundry Detergent Cartel

Wed, 04/13/2011 - 5:07am
Gabriele Steinhauser, AP Business Writer

BRUSSELS (AP) — European Union regulators on Wednesday fined consumer products companies Procter & Gamble and Unilever a total of euro315.2 million ($456 million) for fixing prices of powdered laundry detergent together with Henkel in eight EU countries.

Germany's Henkel AG escaped a fine because it blew the whistle on the cartel.

U.S.-based Procter & Gamble Co. has to pay euro211.2 million ($306 million), while British-Dutch company Unilever NV was fined euro104 million ($150 million). Both companies had their fines reduced because they agreed to settle the case with the Commission and cooperated with the investigation.

The three companies are the leading producers for washing powder in Europe, the Commission said. Unilever makes laundry detergents including OMO and Radiant; Procter & Gamble produces Ariel and Tide; while Henkel owns the Persil brand. In the U.K. and Ireland, Persil is sold by Unilever.

The cartel was started when the companies were in joint talks on how to cut down on packaging, said the EU's Competition Commissioner Joaquin Almunia.

"They used this environmental initiative to agree on market share and to agree on not reducing the prices even if the packages were smaller," Almunia said.

The cartel lasted from Jan. 2002 until March 2005 and covered Belgium, France, Germany, Greece, Italy, Portugal, Spain and the Netherlands, the Commission said.

Unilever said the fine falls below provisions already made in the company's 2010 results. "Unilever believes it is in the best interests of the company for Unilever and the Commission to have reached this settlement," it said in a statement.

Procter & Gamble said the fine was not a surprise and it had already put away money for it in recent earnings reports. "It's our policy to comply with the letter and spirit of all laws everywhere we do business," spokesman Paul Fox said in Cincinnati. "We've already taken the appropriate internal action and strengthened our global compliance program."

Henkel said it discovered the cartel in 2008 during an internal audit and immediately notified the authorities.

The detergent case is the third cartel case the Commission decided to settle this year. A settlement leads to lower fines, but it also cuts down on the time and money the EU has to spend on an investigation.

Almunia said companies should expect the Commission to pursue a relentless fight against cartels, "which extract higher prices from consumers than if companies compete fairly and on the merits."

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Toby Sterling in Amsterdam, David McHugh in Frankfurt and Dan Sewell in Cincinnati contributed to this article.

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