Unilever, P&G Fined $457 Million by EU for Detergent Cartel

Unilever and Procter & Gamble Co. (PG) agreed to pay 315.2 million euros ($457 million) in fines to end a European Union probe into price fixing of laundry detergent.

P&G, the maker of Ariel washing powder, was fined 211.2 million euros and Unilever will pay 104 million euros for agreeing with Henkel KGaA, the German maker of Persil, to fix prices of the detergent in eight countries over a three-year period, the European Commission said today in an e-mailed statement.

Henkel wasn’t fined because it was the first company to supply evidence to regulators. Antitrust agencies across Europe have been investigating cosmetics and detergent manufacturers for agreements to fix or increase prices. The commission said it reduced fines on the other two companies because they cooperated in the probe and agreed to settle.

“Henkel, Procter & Gamble and Unilever engaged in their anti-competitive practices at their own initiative and at their own risk,” Joaquin Almunia, the EU’s competition chief, said. Almunia said the companies agreed not to cut prices when they shrank the size of packaging for laundry detergent and then later agreed to increase prices.

Unilever spokesman Trevor Gorin said the amount it has to pay was “within the provision made by Unilever in its 2010 results.” Procter & Gamble spokeswoman Marina Barker said it had “previously taken an appropriate financial reserve” to cover the fine and strengthened its global compliance program.

‘Concrete Evidence’

Henkel in 2008 acknowledged “concrete evidence of misconduct by employees in several Western European countries,” Dirk-Stephan Koedijk, the company’s chief compliance officer, said in a statement.

Henkel said it “immediately informed the authorities,” and took steps “to uncover and avoid future misconduct.”

The three companies started coordinating prices in 2002, the commission said, when they put into practice an industrywide initiative to improve environmental performance by reducing the weight of washing powder and its packaging.

The price-fixing deal covered Belgium, France, Germany, Greece, Italy, Portugal, Spain and the Netherlands, the commission said.

The settlement is the third between companies and the European Commission, following deals last year that ended EU probes into producers of D-RAM memory chips and animal feed phosphates.

Almunia said last week that settlements were a “win-win situation” because they cut companies’ fines, reduced enforcement costs and freed up regulators’ resources.

Last year, Italy fined Unilever, P&G and 13 other companies for coordinating price increases for cosmetics. It didn’t fine Henkel because it was the first to inform regulators of the cartel. German units of Unilever, Henkel and Sara Lee were fined about 37 million euros by the country’s cartel office in February 2008 for fixing toothpaste and detergent prices.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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