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 3 – First In, First Out Clean In the last episode, we saw how Unilever, Procter & Gamble, Henkel and Colgate-Palmolive – the four biggest laundry detergent makers in France – were suspected of coordinating their commercial strategies to control the market. For Unilever, investigators had uncovered evidence of collusion during a separate investigation into household cleaning products. Following that lead, the French Competition Authority began to suspect that Unilever might have been involved in other, similar cartels. What followed was a race against time between the four companies. Only one could secure full immunity under the leniency programme. The others could at best hope for reduced fines. Anne Krenzer is the head of the Leniency Unit at the French Competition Authority. She’s the person who deals with whistleblowers, companies that decide to come forward and expose organised fraud.

• Anne Krenzer

  In some cases, there’s a race between companies trying to get leniency. Usually, one company comes forward first and reports the infringement – that’s the starting gun. Then, we raid the other companies suspected of being involved. Once that happens, they know they’re in the French Competition Authority’s sights. They start to ask themselves, “How can we limit the damage? How can we avoid a fine?”. That’s when the real race for leniency begins. As head of the Leniency Unit, I’m the one who answers the phone. In most cases, the process starts with a law firm. They call and say, “My client wants to file a leniency application”. I log the date and time immediately. Sometimes, barely a minute later, another call comes in. My job is to formalise everything, to record precisely who called and when. We’ve had cases in the past where a matter of minutes has made all the difference. Between the company that applies for leniency second and the company that applies third, the fine can vary by hundreds of millions of euros – just because one of them has called a minute later.

• journalist

  In 2008, a Unilever sales rep walked into the French Competition Authority’s offices in Paris, to apply for leniency. He didn’t know it at the time, but he was the first to blow the whistle on the cartel and hand over incriminating evidence to investigators. In the months that followed, the other three companies – Procter & Gamble, Henkel and Colgate-Palmolive – would all do the same, one after the other.

• Anne Krenzer

  When a company applies for leniency, they have to tell us everything – how, what, where, when. They also have to point us in the direction of evidence, and provide all kinds of documents to back up their story. So that could be recordings, for example, or meeting notes showing what was discussed.

• journalist

  To avoid tipping off the other cartel members, the French Competition Authority may, in rare cases,authorise certain employees to keep taking part in the illegal activities for a little while longer.

• Anne Krenzer

  If the cartel is still active, and the companies are still meeting regularly while we’re planning raids, it might look suspicious if the leniency applicant suddenly stops showing up. The others will notice. “Why isn’t so-and-so here anymore? They were always so involved.” And that’s when the penny drops. “Uh-oh, smells like leniency.” Once that happens, they’ll start covering their tracks, getting rid of evidence. And that’s exactly what we want to avoid. So sometimes, we make exceptions and let the applicant keep playing along – at least up until the raids happen.

• journalist

  The case then passes from the head of the Leniency Unit to the case officers. Their job is to piece together the cartel’s history, down to the smallest detail. What was the size of the market affected? How serious was the conduct? How long did the practices go on for?

• Pierre Larcher

  A leniency request always starts with the first company to come forward and report a cartel that we knew nothing about. From there, we usually decide to check their story by conducting raids.

• journalist

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

• Pierre Larcher

  In the laundry detergent case, the funny thing is that we never actually had to carry out any raids. All the companies came forward on their own, one after the other, in a very short space of time, each bringing us information.

• journalist

  To qualify for immunity from fines, a company has to provide evidence that adds real value beyond what the French Competition Authority already knows. The first to do so gets full immunity, while the others may be eligible for a reduction. How much leniency each company receives depends on two things: the order in which they report the cartel, and the significance of the evidence and explanations they provide about how it operated. That’s how the investigators build their case. Meanwhile, each company’s lawyers try to downplay their client’s role. The catch? They don’t know what the investigators already have, or which company handed it over first.

• Pierre Larcher

  It makes our job much easier when you’ve got four companies, all telling the same story from the start and all providing evidence to help us piece the case together. Usually, there’s just one leniency applicant, or two at most. Often, the second one only comes forward after the raids. By then, they’ve realised something’s up, and that’s when the race kicks off.

• journalist

  As the first to blow the whistle on the laundry detergent cartel, Unilever wouldn’t have to pay any fine at all. That might sound surprising. But for Anne Krenzer, head of the Leniency Unit, it’s the only way to dismantle cartels.

• Anne Krenzer

  If there’s no leniency applicant, there’s no case. It’s as simple as that. Without the company that comes forward and blows the whistle, we wouldn’t be able to investigate the cartel and sanction the other companies involved. So the way we see it, granting one company immunity from fines, it’s kind of like an investment. You give them a pass and, in return, you get to restore a bit of order to competition and hold the others accountable.

• archive

  Back in France with yet another price-fixing scandal. This time it's the laundry detergent makers. The case has been dubbed "the laundry detergent cartel". This morning, France's competition watchdog announced record-breaking fines for three laundry detergent manufacturers. After two years of investigation, the French Competition Authority issued its decision attracting significant media coverage. France's competition watchdog has exposed a major scandal. All the leading brands are implicated, accused of secretly coordinating prices and promotions.

• Speaker #1

  In the end, the French Competition Authority came down hard on the laundry detergent makers. The fines were substantial – a total of €360 million, later upheld in full by the Paris Court of Appeal. Procter & Gamble got €240 million, Henkel €92 million and Colgate-Palmolive €35 million. And Unilever? As the first company to come forward, it was granted full immunity. Here’s Stanislas Martin, the General Rapporteur at the French Competition Authority.

• stanislas martin

  These were everyday products, things we all buy and use. So the cartel had a direct impact on the general public, on you, on me, on all of us. The French Competition Authority stepped in and fined the companies involved. In principle, anyone who overpaid because of the cartel, the real victims, can go to court and fight to get that money back.

• journalist

  And that brings us to the end of this three-part story on the laundry detergent cartel.

• Narrator

  Cartels & Co. is brought to you by the French Competition Authority and produced in English by Peech Studio. To find out more about the French Competition Authority, its work, and other cartels dismantled thanks to its investigations, visit our website or follow us on social media.