Colgate fined $18m for price fixing

Colgate-Palmolive has been ordered to pay an $18 million fine for colluding with rivals to fix the price of detergents.

Colgate says its former sales executive Paul Ansell engaged in cartel conduct. Picture: Nicole Garmston

Colgate-Palmolive has been ordered by the Federal Court to pay an $18 million fine for colluding with rival companies to fix the price of detergents.

The fine is a win for competition watchdog the Australian Competition & Consumer Commission in its legal action against Colgate, fellow detergent manufacturer Cussons, and supermarket chain Woolworths, claiming cartel conduct and other anti-competitive behaviour.

The Federal Court yesterday made orders that Colgate-Palmolive pay the $18m penalty for contraventions of the Trade Practices Act, following admissions by the company 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.

“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 chairman 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 anti-competitive 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 and PZ Cussons Australia 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 former sales director.

The penalties ordered against Colgate comprise $12m for the understanding to withhold supply and $6m for the information sharing understanding.

The 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.