Bundeskartellamt imposes multi-million fines against manufacturers of drugstore products

The Bundeskartellamt has imposed fines totalling approx. 37 million euros against four brand manufacturers of drugstore products and their sales managers for coordinating price increases (19 million euros) and exchanging information about the state of annual talks with retailers (18 million euros). The companies involved are Henkel Wasch- und Reinigungsmittel GmbH, Schwarzkopf & Henkel GmbH, Sara Lee Deutschland GmbH and Unilever Deutschland GmbH. The proceedings were initiated on the basis of a leniency application submitted by Colgate-Palmolive GmbH.

At the turn of the year 2005/2006 the companies had agreed to increase the list prices of the following drugstore products by around 5 per cent:

a) dishwashing detergent of the brand names “Pril” and “Palmolive”
b) shower gel products of the brand names “Fa”, “Duschdas” and “Palmolive” and
c) toothpaste of the brand names “Signal”, “Dentagard” and “Colgate” (Basis).

The above brands are almost identically positioned in price in their product areas and are therefore in close competition with one another.

Furthermore the above brand product manufacturers, along with further companies in the sector, have for years been involved in a regular exchange of information about negotiations with retailers. At regular meetings of the Trademark Association’s (Markenverband) working group on “body care, cleaning agents and detergents” (KWR) information was exchanged about new demands for rebates from retailers and contracts concluded between the contractual parties within the framework of the so-called annual talks.

The aim of this strategy was to influence the market behaviour of the competitors or to dispel uncertainty from the outset about the competitors’ future market behaviour.

The President of the Bundeskartellamt, Dr Heitzer, stated: “In the interest of the consumer the high level of intensity of competition in the retail sector may not be undermined by anti-competitive agreements between the brand manufacturers. In a competitive situation companies set their prices independently of one another. The exchange of sensitive information about rebate negotiations in itself restricts competition and infringes German and European competition law.”

The Bundeskartellamt will shortly initiate proceedings against the other participants in the information exchange.

The orders imposing the fines are not yet final. The persons and companies concerned can appeal against the decisions at the Düsseldorf Higher Regional Court.