Colgate fined $18m for collusion

Leo Shanahan
APRIL 28, 2016
THE AUSTRALIAN
Colgate-Palmolive has been ordered to pay an $18 million fine by the Federal Court for colluding with rival companies to fix the price of detergents in Australian supermarkets.
The fine is a win for the competition watchdog the Australian Competition and Consumer Commission in its legal action against Colgate-Palmolive, fellow detergent manufacturer Cussons and Woolworths, in which it has claimed cartel conduct and other anti-competitive behaviour.
The Federal Court has made orders that Colgate-Palmolive Pty Ltd (Colgate) pay the $18 million penalty for contraventions of the Trade Practices Act, following admissions by Colgate in the court action brought by the ACCC.
Colgate admitted to entering understandings which limited the supply, and controlled the price, of laundry detergents, and agreed with the ACCC on the penalty.
It also admitted that one of Colgate’s most senior former sales executives, Paul Ansell, engaged in the cartel conduct. Mr Ansell has been disqualified from managing corporations for seven years and has been forced to pay $75,000 towards the ACCC’s costs.
The fine is the third-largest the Federal Court has ever ordered for anti-competitive breaches, and the Court described the conduct as serious.
“By ordering these substantial penalties, the Court has recognised the seriousness of this conduct, which affected the supply and pricing of laundry detergents, a consumer staple, ACCC Chair Rod Sims said.
“The information sharing understanding involved phone calls between senior managers of competing companies, many of which started as social calls, but turned to unlawful exchanges of pricing information. Any contact between competitors carries risk and while discussion of price is particularly serious, there are many topics which may lead to an anticompetitive understanding.”
The ACCC’s case against Cussons and Woolworths continues and will be heard in June this year.
Colgate has admitted that it had a deal with Unilever Australia Limited (Unilever) and PZ Cussons Australia Pty Ltd to cease supplying standard concentrate laundry detergents in early 2009 and supply only ultra concentrates from that time.
Colgate also admitted that it and Unilever shared sensitive market information about when the two companies would increase the price of their laundry detergents. The information was shared in telephone calls between Mr Ansell and senior Unilever executives, including Unilever’s sales former director.
The penalties ordered against Colgate comprise $12 million for the understanding to withhold supply, and $6 million for the information sharing understanding.
The Federal Court also made other orders by consent that Colgate update its trade practices compliance program and maintain that program for three years, as well as paying a contribution of $450,000 towards the ACCC’s costs