Woolworths fined $9 million for role in laundry detergent cartel

Posted by AFN Staff Writers on 6th June 2016

LaundryThe Australian Federal Court has ordered Woolworths to pay AUD $9 million in penalties for its role in a laundry detergent cartel.

During the court proceedings brought by the Australian Competition and Consumer Commission (ACCC), Woolworths admitted to being knowingly concerned in the making of, and giving effect to, an understanding between Colgate-Palmolive Pty Ltd (Colgate), PZ Cussons Australia Pty Ltd (Cussons) and Unilever Australia Limited (Unilever). The understanding involved each party ceasing the supply of standard concentrate laundry detergents to Woolworths in early 2009 and instead supply ultra concentrates from that time onwards.

The ACCC alleged the savings from selling ultra concentrates was not passed onto consumers.

The actions were found to contravene the Trade Practices Act 1974 (now called the Competition and Consumer Act 2010).

Justice Jagot said in court that “the penalty reflects the objective seriousness of the contraventions”.

ACCC Chairman, Rod Sims, said the penalty acknowledged Woolworths was knowingly concerned in an anti-competitive understanding.

“This penalty is the largest the ACCC has obtained against a party that was an accessory to competition law breaches by being knowingly concerned in anticompetitive conduct,” Sims said.

“This is a timely reminder that businesses must ensure that their competition law compliance programs educate their staff about the risks involved in communications or other conduct which facilitates an anti-competitive understanding between other businesses,” he stated.

Woolworths’ response

Woolworths publicly confirmed  it had reached a settlement with the ACCC in regards to the matter.

“Woolworths acknowledges that the behaviour of one of its former buyers was not consistent with the high standards of competition law compliance we seek to achieve,” the supermarket said.

“The proceedings have been settled with Woolworths making limited admissions in relation to one of the claims made by the ACCC,” Woolworths said.

“Since the issues leading to today’s Court hearing occurred, now over seven years ago, Woolworths has reviewed and upgraded its compliance program and training and will continue to do so to help ensure that all employees comply with the Company’s Code of Conduct at all times,” Woolworths stated.

Case background

The court proceedings began in 2013 against Colgate, Cussons, Woolworths and a Mr Paul Ansell, a former Colgate sales director.

As part of proceedings, Unilever applied for immunity under the ACCC’s Immunity Policy for Cartel Conduct and consented to be named as the immunity applicant.

On 28 April 2016, the Federal Court ordered that Colgate pay total penalties of AUD $18 million for admitted contraventions of the Trade Practices Act, which included AUD $12 million in penalties for making and giving effect to an understanding to limit the supply of laundry detergents.

Colgate was also ordered to pay penalties of AUD $6 million for making and giving effect to an understanding to share sensitive market information, including information about when they would increase their prices.

Mr Ansell admitted to being knowingly concerned in this conduct and by consent was disqualified from managing corporations for seven years.

The ACCC’s case against Cussons is listed for hearing beginning on 7 June 2016. The ACCC is seeking pecuniary penalties, declarations, injunctions, compliance programs and costs.