French watchdog issues record €951m in price-fixing fines

France's competition watchdog has handed out a record €951m in fines against companies including L'Oreal and Unilever after finding them guilty of fixing the prices of household and personal care products.

The fines, the biggest the French authority has issued, came after it uncovered a secret network of "friends" and "clubs" involving the companies' managers between 2003 and 2006 aimed at forming a common front before negotiations with distributors.

The watchdog said the concerted practices by the companies, which also included SC Johnson, Colgate-Palmolive and Germany's Henkel, were "particularly sophisticated . . . they met regularly and secretly to co-ordinate their commercial policies and discuss their pricing policies".

The evidence came largely from companies that offered information in return for reduced fines under the authority's "leniency programme". The regulator also launched a raid on a Paris restaurant where executives from several of the companies were having lunch. The products involved ranged from shampoo and toothpaste to air fresheners.

The hardest hit of the groups is Paris-based L'Oreal, which must pay €189.5m. UK-based Unilever was ordered to pay more than €172m in total.

Reckitt Benckiser, the UK-based consumer goods group, was ordered to pay a total of €121m.

Colgate-Palmolive, and cleaning products group Henkel, received reduced fines for their collaboration in the investigation. SC Johnson avoided paying fines thanks to its role as a whistleblower.

The watchdog said that companies belonging to Unilever, Johnson & Johnson, Henkel, Reckitt Benckiser, Colgate-Palmolive, Procter & Gamble and Beiersdorf had "not challenged the facts".

It added that they had also proposed compliance commitments for the future.

But on Thursday, L'Oreal denied any wrongdoing. The group, which owns global brands such as Lancome, Garnier and Maybelline, said it was "extremely surprised" by the decision.

It also said the size of the fine was "totally out of proportion" and that it would appeal against the decision - although it confirmed that it had to pay the fine immediately.

The competition authority said the fines were based on the size of the respective markets in France, which were €4.2bn for homecare products in 2006, and about €7bn for personal care.

According to the authority, the top eight players in France's personal care market accounted for about 70 per cent of sales - with the top three accounting for 43 per cent. L'Oreal alone accounts for 28 per cent of the whole personal care market.

"The level of the fines is linked to the important size of the concerned markets," said the competition authority. "These practices were particularly serious, given not only their secret character but also their nature . . . these infringements harmed the economy".

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