Colgate, Cussons and Woolworths in Hot Water over Claimed Laundry Soap Cartel
Tuesday 17 December 2013 @ 1.16 p.m. | Trade & Commerce
The Australian Competition and Consumer Commission (ACCC) has initiated civil proceedings against three of Australia’s largest companies regarding a suspected cartel relating to the price and supply of laundry detergent concentrates.
The consumer regulator has alleged that Colgate-Palmolive and PZ Cussons Australia “made and gave effect to cartel and other anti-competitive arrangements”.
Unilever came forward with information about the alleged conduct which, while implicating Unilever in the allegations also entitled them to immunity under the ACCC’s Immunity Policy for Cartel Conduct.
In their statement of claim filed in the Federal Court last week, the ACCC claimed that in the first quarter of 2009, Colgate, Cussons and Unilever entered into arrangements to terminate the supply of standard concentrate laundry detergents to consumers and instead, supply only ultra-concentrate detergent.
The ACCC also alleges that the companies organised to concurrently changeover laundry detergents (including popular brand laundry products such as Cold Power, Radiant and Omo) to ultra concentrates and to sell the ultra concentrates for the same price per wash as the equivalent standard concentrated products, despite the fact that concentrates are considerably cheaper to produce, store and transport than standard detergents.
The ACCC also alleges that Woolworths is also involved because the company, as well as a former Colgate sales director Paul Ansell was “knowingly concerned in the alleged arrangements.”
Code name ‘Project Mastermind’
According to the ACCC’s statement of claim, in 2008 Colgate, Cussons and Unliver enjoyed 83 per cent of the market for laundry detergent.
It claims consumers freely switched between brands based on cheapest price and that half of all detergent was being sold at sale prices. It is alleged that Colgate, concerned that further price reductions would cut $146 million from industry revenues over the five years suggested colluding with its competitors. Meetings between the three manufacturers and Woolworths were held regularly through 2008 and 2009 to synchronize the ceasing of supply of regular-strength laundry powders and the institution of ultra-concentrate products in same-sized packages with similar formulations. The project, code-named “Project Mastermind” in an internal Cussons email, came to contain an arrangement not to undercut each other’s prices.
Four Woolworths’s employees, at least two of whom remain employed at the retailer, are alleged to have been involved in the meetings and entirely conscious of the plan.
ACCC chairman Rod Sims commented that these alleged arrangements “offered significant cost savings which, by agreement, were not passed onto consumers”.
“These alleged arrangements also standardised the ultra-concentrate products offered, denying consumers a variety of choices on pricing, package volumes and the strength of the concentrate product.
By way of contrast, when similar products were launched in New Zealand, there was significant discounting, such as offering a larger pack for the price of a smaller pack. The ACCC alleges that the benefits of these competitive actions were denied to Australian consumers”.
Woolworths said it will “vigorously defend” the action brought against it.
In a statement Colgate-Palmolive said it will give a full review of the allegations and the evidence relied on by the proceedings, then “respond appropriately”.
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