The world’s four largest fragrance suppliers were raided on Wednesday as part of a co-ordinated move by regulators to investigate overcharging and other anti-competitive practices in the industry.
Swiss companies Firmenich and Givaudan, Germany’s Symrise and US group International Flavors & Fragrances — which together control roughly 60 per cent of the market — are all under investigation for suspected collusion by antitrust authorities in Switzerland, the UK, the US and EU.
“There are suspicions that [the companies] have co-ordinated their pricing policy, prohibited their competitors from supplying certain customers and limited the production of certain fragrances,” Swiss competition regulator Comco said on Wednesday. It added that the companies were presumed not guilty while the investigation was under way.
The chemicals produced by the industry go into products from perfumes to toothpaste and detergents. In 2020, it was worth €39bn globally, according to the most recent available data from Euromonitor.
All four companies confirmed that they were under investigation.
Symrise said that it expected authorities to communicate the outcome of the investigation “in a timely manner”. The UK Competition and Markets Authority said it expected to have analysed all information gathered by early 2024.
Heinz-Jürgen Bertram, Symrise’s chief executive, said in a media call for the company’s annual results that it had “nothing to hide”. The group’s shares were down 3 per cent in morning trading before recovering in the afternoon. Givaudan’s shares initially fell more than 4 per cent, while IFF was down nearly 3 per cent after the market opened.
Privately-owned Firmenich last year announced a €41bn plan to merge with the Dutch ingredients and bioscience group DSM, which was approved by DSM shareholders in January.
Under EU rules, penalties for companies involved in illegal cartel activity include fines of up to 10 per cent of global turnover.
Mark Jephcott, partner at law firm Simmons & Simmons, called the raids “noteworthy” because of the co-ordination across jurisdictions.
“It is fair to say that we are likely to see more of the same as the authorities get back fully into the swing following a hiatus during the pandemic,” he said.
The European Commission did not comment on the individual companies involved. But Brussels regulators announced inspections in the sector earlier this week. The commission said on Tuesday that it was concerned the companies “may have violated EU antitrust rules that prohibit cartels and restrictive business practices”.
Brussels said it was in touch with its counterparts in the US, the UK and Switzerland and that the inspections were carried out after consulting with them.
Additional reporting by Kate Beioley