Introduction
Pending case
Comment


Introduction

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

Unilever Australia Limited was also alleged to be a participant in the relevant arrangements with Cussons and Colgate, but it applied for immunity under the ACCC's immunity policy and is thus not included in the proceedings.

Pending case

In the case brought before the Federal Court the ACCC has alleged that from around 2008, the three companies sought to deny consumers the benefit of lower prices for detergent products and to 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 has argued that this was a deliberate coordinated arrangement between the three companies, instigated by Colgate.

The ACCC has further alleged that the three companies sought to:

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

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

The ACCC has further alleged that Woolworths Limited and Paul Ansell, a former sales director of Colgate, were knowingly concerned in these arrangements. The ACCC has alleged that Woolworths played a significant role both in the 2009 roll-out of ultra-concentrates and in respect of pricing. The ACCC has also alleged that Ansell was involved in sharing market-sensitive information with Unilever with regard to pricing, the purpose of which was to control or maintain prices. In January 2008 and thereafter, Ansell also held meetings with representatives of Woolworths at which pricing and the roll-out of ultra-concentrates were discussed.

Comment

These proceedings follow a recent victory for the ACCC with respect to cartel conduct. In October 2013 the Federal Court imposed a penalty of A$2 million on Koyo in relation to anti-competitive conduct regarding the price of ball and roller bearings.

The pending proceedings relating to the alleged detergent cartel involve high-profile players and the reputations of not only those companies, but also members of their respective senior management teams. While recent media attention has focused on the ACCC's apparently precarious financial position, in the case at hand the ACCC has nevertheless committed to taking on three big companies (ie, Cussons, Colgate and Woolworths) and chosen not to step away from what is likely to be a significant fight.

For further information on this topic please contact Bill Fragos at Piper Alderman by telephone (+61 2 9253 9999), fax (+61 2 9253 9900) or email (bfragos@piperalderman.com.au). The Piper Alderman website can be accessed at www.piperalderman.com.au.