Australia: Massive fine for Woolworths

Australia: Massive fine for Woolworths

rsz_woolworths_slammed_with_massive_fineWoolworths has been fined $9 million over its role in a laundry detergent cartel case brought by the Australian Competition and Consumer Commission, after Woolies admitted to being “knowingly concerned in an anti-competitive understanding” with detergent producers.

The penalty is the largest the regulator has obtained against a party that was an accessory to competition law breaches, ACCC chairman Rod Sims said in a statement. Federal Court Justice Jayne Jagot explained that “the penalty reflects the objective seriousness of the contraventions”.

An understanding struck between Woolies and suppliers Colgate-Palmolive, PZ Cussons and Unilever Australia, which together controlled 83% of the $500 million laundry detergent market, had the effect of pushing up prices for consumers.

The anti-competitive arrangement led to the companies behind well-known brands such as OMO, Surf and Radiant to stop supplying standard concentrate laundry detergents in 2009. Instead the companies would only supply ultra-concentrated products. The catch was these products would be sold at the same price per wash as the standard concentrate products and cost savings would not be passed onto consumers.

Woolworths said in a statement that it “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.” Woolworths also said it has since upgraded its compliance training for employees.

In April Colgate was fined $18 million, which was the third-largest the Federal Court had ever ordered for anti-competitive breaches. The company also admitted one of its most senior sales executives Paul Ansell had engaged in cartel conduct. Ansell has been disqualified from managing corporations for seven years.

Unilever applied for immunity under the watchdog’s ‘Policy for Cartel Conduct’.

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