PARIS — Thirteen prestige beauty brands and France’s three leading selective perfumery retailers have been fined a combined 46.2 million euros, or $55.1 million at current exchange, by the country’s competition watchdog for fixing retail prices between 1997 and 2000.
The fines were handed out to beauty brands owned by LVMH Moët Hennessy Louis Vuitton, L’Oréal and Chanel, and to retailers Marionnaud Parfumeries, Sephora and Nocibe.
Under European law, retailers are free to choose their own prices in-store to encourage competition. Suppliers can suggest — but not impose — the price level at which their products are sold.
Le Conseil de la Concurrence (the Competition Council) here found that “between 1997 and 2000, companies manufacturing fragrance and cosmetics brands had agreements with the channel’s distributors, notably national chains Marionnaud, Nocibe and Sephora, to eliminate competition among retailers selling their products.”
Marionnaud was fined 12.8 million euros, or $15.3 million; Sephora, 9.4 million euros, or $11.2 million, and Nocibe, 6.2 million euros, or $7.4 million. The council found those retailers had been adhering to some beauty brands’ pricing policies and helping to monitor whether the prices of their retail competitors complied with the levels imposed by those brands.
“Brands were agreeing to a guideline retail price, as well as the maximum level of discount that retailers could give on those brands’ products, in order to uniformly raise the retail prices of products offered for sale,” the council said in a statement. The end result was that high-end beauty products were being sold at around the same price levels in each of France’s three main perfumery chains.
LVMH, which was fined 14.5 million euros, or $17.3 million, for price fixing by its perfumery chain Sephora, and its Parfums Christian Dior, Parfums Givenchy, Guerlain and Kenzo Parfums brands, said Tuesday that it is appealing the decision.
In a statement, LVMH said, “The council refused to take into consideration the demands and specificities of luxury products distribution.”
However, in its statement, the council said companies’ justification that they were defending “the luxury image” of their brands “could not justify the restrictions placed on the principal of free pricing levels.” It added that, “in reality, this lack of competition, organized by the agreement between the manufacturer and its distributors, allowed everyone to raise [prices] and then to share the surplus obtained to the detriment of the consumer.”
The council noted the existence of a “price police” comprising both manufacturers, who allegedly threatened retailers with reprisals for not adhering to their recommended prices, and retailers, who allegedly reported any lower prices found in competing chains, to manufacturers.
Another fine was given to Chanel, which was ordered to pay 3 million euros, or $3.6 million. The company also said Tuesday that it will appeal the council’s decision.
L’Oréal’s luxury products division was told to pay 4.1 million euros, or $4.9 million; Yves Saint Laurent Parfums, 1.8 million euros, or $2.1 million, and the Estée Lauder Cos., 1.6 million euros, or $1.9 million.
None of those companies had a comment to make Tuesday on the council’s ruling.
Fines of less than 1 million euros were given to numerous companies, as well. Beauté Prestige International was charged 810,000 euros, or $966,750; Thierry Mugler Parfums, 640,000 euros, or $763,850; Comptoir Nouveau de la Parfumerie, 410,000 euros, or $477,410; Shiseido France, 340,000 euros, or $405,800, and Pacific Creation Parfums, 90,000 euros, or $107,420.
Responding to the council’s judgment and in defense of the companies involved, Alain Grange Cabain, president of the French Federation of Fragrance, Cosmetics and Toiletries, said: “What has been criticized dates back 10 years, and the situation has now very much changed and very much improved.”
French beauty brands and retailers have one month to appeal the council’s decision.