Competition commission targets market leaders Givaudan, domestic rival Firmenich, International Flavors & Fragrances and Symrise
08 March 2023 - 17:37
byJohn Stonestreet and Ludwig Burger
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The logo of Swiss flavours and fragrances maker Givaudan is seen at its innovation center in Kemptthal, Switzerland on January 10 2020. File Picture: REUTERS/Arnd Wiegmann
The share prices of Givaudan and Symrise took a beating on Wednesday after the Swiss antitrust agency named them as part of a quartet of companies in the crosshairs of international competition watchdogs.
Swiss competition commission COMCO said its probe was targeting market leaders Givaudan, domestic rival Firmenich, which is merging with Dutch chemicals group DSM, US-based International Flavors & Fragrances and Germany’s Symrise.
The scent industry worth more than $5bn creates and makes fine fragrances for brands including Calvin Klein, Hugo Boss and Gucci, while also designing the smell of household products of global companies such as Procter & Gamble and Colgate-Palmolive.
News of the probe into the supply of fragrances and fragrance ingredients broke late on Tuesday, when Givaudan confirmed it was being investigated.
The share price of Symrise, which on Wednesday forecast a 2023 core profit margin slightly below market expectations, fell 3.7% in mid-morning, though its CEO said he did not expect Symrise to be affected and its role was primarily that of a witness.
Givaudan fell 3.7% and DSM lost 3.5%, underperforming a 1.3% decline in the STOXX Europe 600 Chemicals index, while US-listed International Flavors & Fragrances (IFF) was down 2.9% at Tuesday’s close.
COMCO said several raids were carried out in conjunction with the European Commission, the US department of justice antitrust division and the UK Competition and Markets Authority.
The Swiss agency added it acted on suspicion the companies “co-ordinated their pricing policy, prohibited their competitors from supplying certain customers and limited the production of certain fragrances”.
It said the ingredients in question are used in cosmetics, personal care products, detergents and cleaning products.
The British watchdog on Tuesday set a deadline of early 2024 for analysing and reviewing information gathered from the companies.
A Symrise spokesperson said the group was part of the investigation and that it would co-operate with the authorities.
An IFF spokesperson said the company was “working closely with relevant authorities and co-operating with their industry investigation”.
Firmenich could not immediately be reached for comment.
Symrise said on Wednesday it had a 12% share of the combined market for fragrances, flavours, aroma chemicals and cosmetic ingredients last year, with Givaudan, IFF and Firmenich accounting for 18%, 22% and 11%, respectively.
The German company said fragrances accounted for 13.2% of the €39bn overall market, working out to €5.1bn in industry fragrance revenue in 2022.
The upper limit of fines imposed for breaking EU competition law is 10% of a company’s global revenue.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Swiss probe supply stink in $5bn scent market
Competition commission targets market leaders Givaudan, domestic rival Firmenich, International Flavors & Fragrances and Symrise
The share prices of Givaudan and Symrise took a beating on Wednesday after the Swiss antitrust agency named them as part of a quartet of companies in the crosshairs of international competition watchdogs.
Swiss competition commission COMCO said its probe was targeting market leaders Givaudan, domestic rival Firmenich, which is merging with Dutch chemicals group DSM, US-based International Flavors & Fragrances and Germany’s Symrise.
The scent industry worth more than $5bn creates and makes fine fragrances for brands including Calvin Klein, Hugo Boss and Gucci, while also designing the smell of household products of global companies such as Procter & Gamble and Colgate-Palmolive.
News of the probe into the supply of fragrances and fragrance ingredients broke late on Tuesday, when Givaudan confirmed it was being investigated.
The share price of Symrise, which on Wednesday forecast a 2023 core profit margin slightly below market expectations, fell 3.7% in mid-morning, though its CEO said he did not expect Symrise to be affected and its role was primarily that of a witness.
Givaudan fell 3.7% and DSM lost 3.5%, underperforming a 1.3% decline in the STOXX Europe 600 Chemicals index, while US-listed International Flavors & Fragrances (IFF) was down 2.9% at Tuesday’s close.
COMCO said several raids were carried out in conjunction with the European Commission, the US department of justice antitrust division and the UK Competition and Markets Authority.
The Swiss agency added it acted on suspicion the companies “co-ordinated their pricing policy, prohibited their competitors from supplying certain customers and limited the production of certain fragrances”.
It said the ingredients in question are used in cosmetics, personal care products, detergents and cleaning products.
The British watchdog on Tuesday set a deadline of early 2024 for analysing and reviewing information gathered from the companies.
A Symrise spokesperson said the group was part of the investigation and that it would co-operate with the authorities.
An IFF spokesperson said the company was “working closely with relevant authorities and co-operating with their industry investigation”.
Firmenich could not immediately be reached for comment.
Symrise said on Wednesday it had a 12% share of the combined market for fragrances, flavours, aroma chemicals and cosmetic ingredients last year, with Givaudan, IFF and Firmenich accounting for 18%, 22% and 11%, respectively.
The German company said fragrances accounted for 13.2% of the €39bn overall market, working out to €5.1bn in industry fragrance revenue in 2022.
The upper limit of fines imposed for breaking EU competition law is 10% of a company’s global revenue.
Reuters
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