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.

• journalist

  I’m Isabelle Souquet, a journalist, and you’re listening to Cartels & Co., a series diving into the French Competition Authority’s investigations. First investigation: the laundry detergent cartel. Episode 2 – The Beginning of the End In the last episode, we saw how Unilever, Procter & Gamble, Henkel and Colgate-Palmolive – the four companies that dominated the French laundry detergent market – had been holding secret meetings for years to fix their pricing strategies. But after six years, cracks were starting to show.

• Pierre Larcher

  They were definitely keeping a very close eye on each other.

• journalist

  That's Pierre Larcher, a case officer at the French Competition Authority.

• Pierre Larcher

  In general, manufacturers and producers – they don’t even have to be part of a cartel, really – monitor their competitors’ prices, so they can adjust their own. But in a cartel, it’s also a way to check if everyone’s following the agreement in their stores.

• journalist

  By 2004, the illegal deal between the four big laundry detergent makers had been running for six years. But it was entering troubled waters. Colgate walked away. Unilever began offering discounts that were far too generous for the others' liking. Tensions were rising among the laundry detergent giants. until the whole thing finally collapsed.

• Pierre Larcher

  The cartel fell apart when one of the companies decided to stop playing by the cartel rules and to set their own prices. They’d turn up to the meetings, nod along, but then do their own thing. And because they were all monitoring each other’s store prices, the others eventually caught on. Once they realised that one company was breaking ranks, they thought, “Well, if they’re not sticking to the agreement, why should we?” And that’s how it unravelled.

• journalist

  Each company went back to their usual practices, setting their own prices and promotions. The secret meetings stopped, and the cartel was finished. Fast forward two years to 2006, and a completely different case of unfair competition hit the headlines. This time, it wasn’t about laundry detergents; it was household cleaning products that had caught the French Competition Authority’s attention.

• archive

  A scandal in the world of household cleaning products. Brands like Ajax, Myr, Sif, Terra, Pliz and Antikal are under scrutiny. Their manufacturers, all major multinational companies, are suspected of colluding illegally to keep prices high and dodge competition regulations.

• journalist

  One of the companies under investigation was Unilever, which was also involved in the laundry detergent cartel. The company launched an extensive internal audit to check compliance across its household cleaning product subsidiaries, and the rest of the group. That’s when a sales rep handed his legal department a 280-page document that he’d been told to keep at home. It laid out, in detail, an illegal agreement on prices and promotions between four laundry detergent makers, which were all named: Unilever, Procter & Gamble, Henkel and Colgate-Palmolive. Suddenly, the laundry detergent case was alive again. Until then, nothing had leaked from inside Unilever. But now, there was a risk of investigators uncovering a massive fraud – one that reached across both household cleaning products and laundry detergents. In 2008, raids were carried out at Unilever’s headquarters. Virginie Beaumeunier was the General Rapporteur at the French Competition Authority at the time.

• Virginie Beaumeunier

  There were two cases happening in parallel, both involving the same companies in the home and personal care product sectors. Procter & Gamble, Unilever, Colgate-Palmolive and so on.

• journalist

  She told me the link between the two cases was made thanks to cooperation between two bodies, the DGCCRF France's consumer watchdog and the Competition Authority.

• Virginie Beaumeunier

  Investigators from both the DGCCRF and the French Competition Authority raided the companies. During the raids, the DGCCRF came across some documents relating to laundry detergents. At this stage, it wasn't hard proof, just preliminary evidence. But for the companies, things were starting to look a little worrying.

• Anne Krenzer

  There was some information pointing to a potential infringement in the laundry detergent sector.

• journalist

  That's Anne Krenzer, head of the leniency unit at the French Competition Authority. She's the person who deals with companies that decide to come clean about being part of a cartel in exchange for a reduced fine or even full immunity.

• Anne Krenzer

  And since it's partly the same companies that make these types of products, they began doing internal audits, checking their files and computers for anything that could point to wrongdoing in laundry detergents as well.

• journalist

  To limit the damage, the legal departments at all four companies scrambled to assess the full extent of the situation and warn senior management about the potential scale of the disaster. If a company is involved in a cartel, there’s one possible escape route: leniency. In practice, that means coming clean to the French Competition Authority. The first company to confess and report the cartel can escape a fine, which could otherwise run into hundreds of millions of euros. Unilever decided to take that route. If it was the first to apply for leniency, it would get full immunity and only the others would be punished. But it was a gamble. If another company had already come clean, the fine could be massive. It was like a high-stakes poker game. That’s the end of episode two on the laundry detergent cartel. Next time, a new twist changes everything.

• Speaker #0

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