Transcription

• Narrator

  This podcast is brought to you by the French Competition Authority, France's independent watchdog in charge of tackling anti-competitive practices. This podcast was originally produced in French. You're listening to an English translation by the French Competition Authority, voiced by professional actors. All names are unchanged.

• Speaker #1

  You’re listening to Cartels & Co, a podcast about major cases of economic fraud in France. My name is Isabelle Souquet, and I’m a journalist. In this eight-part series, I’m taking you behind the scenes of investigations by the French Competition Authority, right to the heart of scandals involving big-name companies. I wanted to take a closer look at the world of cartels – what they are, how they work and how they hurt us, the consumers. Because when companies secretly agree to fix prices, it’s our pockets that take the hit, whether that’s through higher prices on the things we buy or the way our tax money gets used. Along the way, you’ll hear from people on the inside – from the teams leading the investigations to uncover and dismantle cartels. First investigation: the laundry detergent cartel. This is the story of how France’s biggest laundry detergent makers colluded to dominate the French market and sell their products at higher prices. Episode 1 – Secret Meetings and Codenames It’s 2008. A representative from a major laundry detergent company walks into the offices of the French Competition Authority in central Paris. He’s about to blow the whistle on his own company’s illegal practices. But it’s also a clever strategy. When several companies in the same sector collude to carve up the market, align their commercial strategies or fix their prices, that’s an illegal agreement called a cartel. And cartels are very hard to detect, let alone dismantle, because the companies involved are extremely well organised. For six years, from 1997 to 2004, the four biggest laundry detergent makers in France – Unilever, Procter & Gamble, Henkel and Colgate-Palmolive – coordinated their commercial strategies, by agreeing on the price differences between their brands and the promotions to be offered to supermarkets. Their goal? To shut out the competition and avoid a price war. The 1950s saw the arrival of the first industrial, petroleum-based washing powders in French homes – and with them, catchy jingles and adverts that promised perfectly clean laundry with every wash. Pourquoi Ariel ? // Why Ariel? Male voice – Archival recording 2 Parce qu’Ariel donne une propreté impeccable, même sans bouillir. // Because Ariel provides outstanding results, even without boiling! Female voice – Journalist The arrival of washing powders coincided with the post-war economic boom and transformed housework. Female voice – Archival recording 3 Quelle propreté avec cette force liquide ? // What sparkling clean, what liquid might! Vizir ! Vizir ! // Vizir! Vizir! Female voice – Journalist To win over housewives in the post-war years, laundry detergent makers were already locked in fierce competition. One lady describes just how crowded the shelves were.

• archive

  I counted 22 different washing powders in the supermarket near me. All good, of course.

• journalist

  Before long, the market was flooded with a host of brands all promising whiter than white laundry. I met Pierre Larcher, a case officer at the French Competition Authority. He investigated the laundry detergent case.

• Pierre Larcher

  It was very organized.

• journalist

  To organise their illegal deal in secret, sales reps from the four laundry detergent companies met three or four times a year.

• Pierre Larcher

  They usually met at well-known spots near their offices. For the laundry detergent companies, that was often brasseries in Western Paris, if I remember correctly. That's where they went over all the cartel's business.

• journalist

  At these secret meetings, the sales reps exchanged confidential information and agreed on their price lists. Every product line was discussed, one by one, for every brand and format: powders, liquids, tablets, fabric softeners. Price differences were fixed across budget, mid-range and premium products. Every price rise was discussed. Even promotions were coordinated: the number, format and value of annual discounts were all agreed in advance. Certain practices were even banned altogether. For example, giveaways were strictly off-limits, so none of the cartel members could run “two-for-one” campaigns. The negotiations could last for hours. And if the talks got heated, the company directors would show up in person to smooth things over.

• Pierre Larcher

  Most of the senior management at the time knew what was going on and had a bit of a hand in it. Marketing sometimes had a say too. And the CEOs would step in now and then, if one of the cartel members strayed. You know how it goes – people can make an agreement, but not always stick to it. There’s a deal on paper, sure, but in practice, you might need to bump up your numbers a bit, maybe because your bonus depends on it. Or perhaps there’s just been some miscommunication or misunderstanding. So sometimes, a brand that was meant to be priced the same as a competitor’s would end up a little cheaper. And that could be risky, because shoppers are really price-conscious when it comes to laundry detergent. If one brand got too cheap, people would switch, and that would eat into the brand’s profits. That’s when the cartel would step in, to nudge prices back up and make sure that everyone was making as much money as possible.

• journalist

  The meetings were recorded in official diaries, but with no details. A code name was always used, usually StoreCheck, as if it were just a routine shop visit. Each time, steps were taken to keep the meeting secret and ensure there was no trail.

• Pierre Larcher

  There are a few ways to cover your tracks. First rule, keep everything at home so that nosy colleagues don't stumble across anything. You've also got to disguise the real purpose and contents of any documents that you've been given. That's where the codenames come in. Henkel became Henri, Hervé or Hugues. Procter & Gamble was simple, always Pierre as far as I remember. And Unilever became Louis or Laurence. They used tricks like that to make sure that nothing could be traced back to them because what they were doing was totally off-limits.

• journalist

  For years, Hugues, Pierre, Christian and Laurence met several times a year, always taking the same careful precautions. No paper exchanges, no copies. Anything outdated shredded immediately. Senior managers were in the loop. But to avoid leaving a paper trail, all debriefings were done orally, and only with the French CEO or country director. But remember, companies that collude to control the market are still competitors. A cartel is always fragile. The moment one company breaks rank for its own interests, it sets off a chain reaction. And more often than not, it signals the beginning of the end. We've reached the end of the first episode on the laundry detergent cartel. Next time, we'll see how one cartel member decided to go it alone.

• Speaker #0

  Cartels & Co. is brought to you by the French Competition Authority and produced in English by Peech Studio.