On 7 March 2023, competition authorities carried out dawn raids in a number of jurisdictions at the premises of businesses active in the fragrances industry to investigate possible breaches of competition laws. The authorities carrying out the dawn raids were the European Commission (EC), the Antitrust Division of the US Department of Justice, the UK Competition and Markets Authority (CMA) and the Swiss Competition Commission (SCC), and the inspections were conducted in consultation between them.
The CMA and the SCC stated that the businesses under investigation are the world’s four leading fragrance suppliers:
- Firmenich International SA, a Swiss company
- Givaudan SA, a Swiss company
- International Flavours & Fragrances Inc, a US corporation, and
- Symrise AG, a German group
The EC also confirmed that inspections took place at the premises of an association active in the fragrance industry in various EU member states.
The CMA and the EC stated that the investigations concern suspected collusion/anti-competitive conduct in relation to the supply of fragrances and fragrance ingredients for use in the manufacture of consumer products, such as household and personal care products. According to the SCC, the suspected violations include coordination of pricing policy, prohibiting competitors from supplying certain customers and limiting production of certain fragrances, which are used in cosmetics, detergents and cleaning products.
The investigations are under the antitrust rules that prohibit cartels and restrictive business practices (e.g. in the EU, the prohibition against anti-competitive agreements in Article 101 of the Treaty on the Functioning of the EU; and, in the UK, the Chapter I prohibition under the Competition Act 1998).
Within the EU, the EC officials were accompanied by their counterparts from the national competition authorities of the EU member states. In the UK, which has left the EU, the raids were solely carried out by the CMA.
This investigation is yet another reminder that competition authorities are coming back to pre-pandemic levels of cartel enforcement activity – in other words: as the masks came off, the gloves came off too. It may therefore be prudent for companies to adopt or refresh their dawn raid compliance training, as non-compliance with a dawn raid decision or warrant can result in significant penalties.
If the businesses in question are found to have breached competition law, they could be exposed to damages actions in addition to significant fines imposed by the competition authorities. Moreover, individuals involved in cartel activities could face criminal penalties in the UK and the US and, in the UK, directors of the companies could face disqualification for up to 15 years.
"The Commission has concerns that companies and an association in the fragrance industry worldwide may have violated EU antitrust rules that prohibit cartels" / European Commission