WWD.com/beauty-industry-news/retailing/beauty-beatgerman-cartel-office-fines-beauty-firms-1617989/
government-trade
government-trade

Beauty Beat:German Cartel Office Fines Beauty Firms

Germany's Federal Cartel Office said Thursday it would fine the German subsidiaries of LVMH Perfumes and Cosmetics for price-fixing and collusion.

BERLIN — Germany’s Federal Cartel Office said Thursday it would fine the German subsidiaries of LVMH Perfumes and Cosmetics, Chanel, Estée Lauder, Clarins, L’Oréal, Coty Prestige Lancaster, Shiseido, YSL Beauté and Cosmopolitan Cosmetics Prestige (now called P&G Prestige Products) for price-fixing and collusion.

Also under investigation are 13 former or current managers of these subsidiaries.

According to a statement from the Cartel Office, representatives of these companies met quarterly since 1995 in a top group referred to as the Schlossrunde, or “elite circle,” and systematically delivered detailed information to a moderator, a former L’Oréal employee.

The information included sales figures, product pricing and returns, how much they paid for advertising, upcoming product launches and dealings with specific perfumeries. The Cartel Office noted that this “elite circle” includes virtually all the major producers of luxury cosmetics, representing annual sales of 1.5 billion euros, or $2.39 billion at current exchange, in Germany.

Calling the activities a restriction of competition and a violation of German and European antitrust laws, the Federal Cartel Office said individual fines of between 250,000 euros, or $397,583, and 2.1 million euros, or $3.3 million, would be levied, totaling close to 10 million euros, or $15.9 million.

The companies and individuals can appeal the fines in the Düsseldorf Higher Regional Court. According to media reports, L’Oréal denied involvement in any collusion, and said it will appeal the decision.

Martin Ruppmann, head of VKE, the German Association of Cosmetic Producers, stated its members had absolutely nothing to do with any unfair activities. He also asked for clarification of the Cartel Office’s limits on communication between competing companies.

This is the second major price-fixing case in the personal care industry in Germany this year. In February, Henkel and the German subsidiaries of Sara Lee and Unilever were fined a total of 37 million euros, or $54.8 million, for coordinating price hikes and sharing information.