Recently the ACCC has commenced proceedings in the Federal Court against PZ Cussons Australia Pty Ltd and Colgate Palmolive Pty Ltd, alleging that they made and gave effect to a cartel, and engaged in anti-competitive conduct relating to their ultra-concentrate products.

Clean as a whistle blower

Whilst Unilever Australia Limited (Unilever) allegedly was also a participant in the relevant arrangements with Cussons and Colgate, Unilever applied for immunity under the ACCC’s Immunity Policy.

Unilever

Products include Drive, Omo and Surf

Cussons

Products include Radiant, Duo, Reflect and Down to Earth

Colgate

Products include Palmolive, Cold Power, Dynamo, Fab and Hurricane

Soap Opera

The ACCC alleges that the three companies, from about 2008, sought to deny consumers the benefit of lower prices for detergent products and maintain higher prices. At this time, Unilever, Colgate and Cussons were looking to cease the supply of standard concentrate products and rolling out lines of ultra-concentrate products from 2009 onwards through the major supermarket chains. The ACCC alleges that this was a deliberate coordinated arrangement between the three companies instigated by Colgate.

Further, the ACCC alleges that the three companies sought to:

  • Coordinate the transition of their respective laundry detergents to ultra concentrates which met specific requirements.
  • Sell ultra-concentrate products for the same price per wash as their respective equivalent standard concentrate products, and not pass on the cost savings to consumers.

The ACCC claims that ultra-concentrate products, given their characteristics, are cheaper to produce, store and transport. The effect of the arrangements was that it denied consumers a variety of choices in relation to the products offered by the three companies, in that there was little to no variation on matters such as pricing, package volumes and the strength of the ultra-concentrate products.

Another aspect of the allegations made by the ACCC is that a former sale sales director of Colgate, Paul Ansell, and Woolworths  Limited  (Woolworths), were knowingly concerned in these arrangements.

With respect to Woolworths, the ACCC alleges that they played a significant role in the 2009 rollout to ultra-concentrates and with respect to pricing. The ACCC also alleges that Mr Ansell was involved in sharing market sensitive information with Unilever about pricing, the purpose of which was to control or maintain prices. In January 2008 and thereafter, Mr Ansell also met with representatives of Woolworths, at which meeting pricing and roll out was discussed.

Spin Cycle

These proceedings follow a recent victory for the ACCC with respect to cartel conduct. In October last year, the Federal Court imposed a penalty of $2 million on Koyo in relation to anti-competitive conduct regarding the price of ball and roller bearings.

The proceedings relating to this alleged detergent cartel though involves some very high profile and large players and the reputations of not only those companies, but also members of their respective senior management. Whilst recent media attention has focussed on the ACCC’s apparently precarious financial position, the ACCC has nevertheless has committed to taking on three big companies in Cussons, Colgate and Woolworths, and chosen not to step away from what looks like will be a significant fight.