Comision Nacional De La Competencia (“CNC”) has levied fines totalling €8,000,000 on the companies Sara Lee, Puig and Colgate Palmolive for arranging and maintaining a cartel of bath gel makers. This is the first time penalties have been levied on businesses under the leniency programme.

The CNC issued a resolution on 21 January 2010 declaring that a cartel had been found to exist, since late 2005, between the leading manufacturers of bath and shower gels.

The proceeding was initiated on the same date the leniency programme first came into effect in Spanish antitrust law. On that day, two of the cartel participants Henkel and Sara Lee submitted respective statements to the CNC disclosing the existence of the cartel and their participation, as well as the involvement of Puig, Colgate and Colomer.

Pursuant to the disclosure and to the leniency programme procedure, the CNC conducted inspections in the offices of all companies involved in the cartel, after granting a conditional exemption to Henkel as the first company to provide the CNC with evidence that allowed the Competition Authority to carry out its investigation into the cartel. This also implied denial of the exemption for Sara Lee, although this company has benefitted from a reduction in the amount of the fine in consideration of having provided evidence of significant added value on the cartel to the CNC's probe.

In its resolution of the case, the CNC Council has concluded that Henkel, Sara Lee, Colgate and Puig did indeed form part of the cartel, and that the investigations must continue to fully establish the position of Colomer with respect to the terms on which it has publicly distanced itself from the cartel.

The cartel agreement was adopted after various meetings between the top executives of the aforesaid sector leaders and consisted in a disguised price hike in bath and shower gels (by more than 15%). The arrangement entailed phased implementation of change in the product format, without raising the product price, as a means of masking an increase in the unit price paid by consumers.

The price increase was achieved by selling the gel in a smaller container than the one previously marketed, while maintaining the same price per container. Pursuant to the agreement, from June 2006 to May 2007 Henkel, Sara Lee and Puig reduced the capacity of the containers for their Fa, La Toja, Magno, Sanex, Lactovit, Kinesia, and Heno de Pravia brands by 15%. Colgate did not reduce its containers by the agreed date.

This conduct is considered a very serious violation of Spanish competition law and the companies involved were fully aware of the unlawful nature of their actions, the effects of which can extend beyond this specific infringement. The price increase affected not just the manufacturers who switched to smaller containers, but all the other brands as well, given that a price increase by the sector leaders further widens the price gap between their products and all the rest. Such price increases means that all other brands, including the socalled "white" brands, would find it easier to raise their prices as well, or to discontinue promotional campaigns, without running the risk of losing ground in the market.

In summary, the conduct of the companies that have now been fined generates a direct harm for consumers, as it reduces competitive pressures between the manufacturers, and translates into higher prices or less aggressive sales campaigns, both with the same result, harm to the consumer.

The fine on Henkel was waived 100%, thanks to the leniency programme, whereas Sara Lee saw its penalty reduced by 40%. In the absence of the leniency programme, Sara Lee would have been fined €6,193,124 and Henkel €4,276,979.

21 January 2010