Colgate, Cussons and Woolworths in hot water related to alleged laundry detergent cartel

The Australian Competition and Consumer Commission has lodged civil proceedings against three of Australia’s biggest companies in relation to an alleged cartel regarding the price and supply of laundry detergent concentrates.

The consumer watchdog has alleged that Colgate-Palmolive and PZ Cussons Australia “made and gave effect to cartel and other anti-competitive arrangements”.

It alleges Unilever Australia was involved, but has granted it immunity under its Immunity Policy for Cartel Conduct, after Unilever came forward with information about the alleged conduct.

The ACCC alleges that in the first quarter of 2009, Colgate, Cussons and Unilever entered into arrangements to cease the supply of standard concentrate laundry detergents to consumers in favour of only supplying ultra concentrates.

The ACCC also alleges that they arranged to simultaneously transition their laundry detergents to ultra concentrates which met certain requirements. It also alleges that they sold ultra concentrates for the same price per wash as the equivalent standard concentrated products.

It alleges that they did not pass on the cost savings to consumers.

The ACCC also alleges that these arrangements applied across the range of popular brand laundry products including Cold Power, Radiant and Omo.

Woolworths is also caught up in the matter, with the ACCC alleging that the retail giant was “knowingly concerned in the alleged arrangements”, as well as a former Colgate sales director Paul Ansell.

ACCC chairman Rod Sims said that ultra-concentrate detergents are cheaper to produce, store and transport.

He said the ACCC alleges that this “offered significant cost savings which, by agreement, were not passed onto consumers”.

“These alleged arrangements also standardised the ultra-concentrate products offered, denying consumers a variety of choices on pricing, package volumes and the strength of the concentrate product,” he said.

“By way of contrast, when similar products were launched in New Zealand, there was significant discounting, such as offering a larger pack for the price of a smaller pack. The ACCC alleges that the benefits of these competitive actions were denied to Australian consumers”.

Woolworths said it will “vigorously defend” the action brought against it.

“We take the ACCC’s allegations seriously and will, of course, cooperate with the Commission. We are committed to high standards of compliance with competition law and regulation.

However, Woolworths said it has “serious concerns” about the way the ACCC has engaged with it.

“We are particularly concerned that good process has been compromised by the need to meet arbitrary deadlines set by the Commission.”

It reiterated that the ACCC has “not alleged that Woolworths was party to any cartel”.

“Our preliminary analysis indicates that Woolworths’ retail price of about half the relevant products decreased in the year or so following the transition.”

Cussons said it “takes seriously obligations and responsibilities to consumers under Australian competition law”.

“As a company with a proud track record in this regard, we are disappointed by the allegations. PZ Cussons has always competed vigorously in a fiercely competitive market to ensure its products are innovative, high performance and competitive for consumers.”

In a statement to SmartCompany, Colgate-Palmolive said it will give a full review of the allegations and the evidence relied on by the proceedings, then “respond appropriately”.

“Colgate-Palmolive believes that its policies and processes are compliant with competition laws and further considers, based on the information available to it, that its transition to Ultra concentrated laundry detergents complied with competition law and had positive impacts for the environment and consumers,” the company said.

The proceedings were filed yesterday with the Sydney registry of the Federal Court of Australia.