Woolies cartel inquiry 'not rushed'
The boss of Australia's powerful competition regulator has fired back at supermarket giant Woolworths over its claims the watchdog hurried its investigation into a $500 million laundry detergent cartel, saying the retailer knew about the cartel allegations as far back as June and that due process was followed.
Australian Competition and Consumer Commission chairman Rod Sims on Thursday night dismissed an argument from Woolworths that its busting of a major cartel that has dragged in owners of some of the biggest brands in the supermarket aisles was timed to meet a Christmas deadline.
"We were not racing to any arbitrary deadline, and we went through an orderly process in our investigation," Mr Sims told BusinessDay.
In a statement of claim filed on Thursday in the Federal Court, the ACCC alleged that in early 2008 Colgate-Palmolive, PZ Cussons Australia and Unilever conspired to co-ordinate pricing, package sizes and product formulation when introducing ultra-concentrate detergents for popular brands including including Cold Power, Radiant and Omo.
The regulator has also alleged Woolworths played a key role in implementing the collusive agreement.
But Woolworths has hit out at the claim, and it being dragged into the cartel conspiracy, saying it had "serious concerns about the way the ACCC has engaged" with the nation's biggest supermarket retailer.
"We are particularly concerned that good process has been compromised by the need to meet arbitrary deadlines set by the [ACCC]," a Woolworths statement said.
Mr Sims denied any arbitrary deadline existed as his investigators trawled through many pages of emails and documents, and argued the courts would be the proper place for Woolworths to defend itself.
"All I can say is I knew that this [cartel case] was ready to proceed, we had been interacting with all parties and they [Woolworths] knew what the allegations were six months ago," he said.
"It was a very orderly, normal process and sometimes you find companies want to argue points of evidence that frankly have to be made out in court."
The ACCC is seeking pecuniary penalties - which could run as high as $10 million or 10 per cent of each company's annual turnover - against Woolworths, Colgate-Palmolive and Cussons. Unilever appears to have blown the whistle on the cartel, as it sought and won immunity against prosecution and is co-operating with the regulator.
The ACCC is claiming ultra-concentrate detergents are cheaper to produce, store and transport, yet savings were not passed onto consumers as occurred in New Zealand, where the alleged cartel did not extend.
According to the ACCC's statement of claim Colgate, Cussons and Unilever had 83 per cent of the market for laundry detergent in 2008.
It alleges the three companies only competed on price, with customers readily switching to whichever was the cheapest brand. Half of all laundry concentrates were being sold at sale prices and Colgate was worried price reductions would cut $146 million from revenue from the industry over the five years.
Regular meetings between the three manufacturers and Woolworths were held through 2008 and 2009 to co-ordinate the ceasing of supply of regular-strength laundry powders and the introduction of ultra-concentrate products in uniform-sized packages with similar formulations.
The project to plan and execute the alleged cartel was referred to "Project Mastermind" in an internal Cussons email and included a deal not to undercut each other's prices.
Four employees of Woolworths are alleged to have been involved in the meetings and fully aware of the plan.
At least two of them remain employed at the retailer, with one working at its hardware business Masters. Maria Fernanda Mejia, an executive at Colgate, is alleged to have emailed a colleague during the discussions: "My issue is as an industry to work together, to maintain our credibility and not look suspicious."