European Union has rapped consumer goods giants Procter & Gamble Co (PG) and Unilever Plc. (UL) over the knuckles for allegedly practicing anti-competitive measures in the laundry and detergent segment across Europe. The fine totaling $456.3 million was split 2:1 between Procter & Gamble and Unilever.

The whole allegation stems from the initiative taken by the two retail giants along with Germany based Henkel to reduce the environmental impact of powder detergents. This project was led by a trade group, the International Association for Soaps, Detergents and Maintenance Products (“AISE”) and it helped customers to shift away from big-box powder detergents, which require lots of packaging to more-compact alternatives.   

However, the three companies formed a cartel and tried to fix price in the detergent market. The three companies also agreed not to lower the prices even when the packaging cost was lowered.  

The three companies are major players in Europe’s laundry-detergent industry, with recognizable brands such as Ariel, Persil and Surf. However, Henkel was excused from paying the fine as it had alerted the EU about the anti-competitive practice in the detergent market.

The commission reportedly relaxed the fines imposed on P&G and Unilever to some extent because the companies were honest about their actions and cooperated fully with the commission in their investigation. P&G’s fine was reduced by 50% and Unilever’s was reduced by 25%. Both fines were lowered by an additional 10% because they agreed to settle.

In China, P&G and Unilever had planned to raise prices of soap and detergent that are sold in China to combat higher raw material costs. The shelves of the shops were almost ransacked as the news of the anticipated price increase spread across the country.  People went in for hoarding detergents and soaps before the price increase could take effect. However, Unilever had deferred its price rise at the request of National Development and Reform Commission (NDRC), China’s top economic planner.

Procter & Gamble Co. currently hold a Zacks #3 Rank with a short-term ‘Hold’ rating. Unilever Plc. holds a Zacks #2 Rank with a short-term ‘Buy’ rating.

 
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