Nurofen, Colgate hit with millions in fines
THE maker of Nurofen has been left with a $1.7 million headache after the federal court found it breached consumer laws.
Reckitt Benckiser was fined the amount after the Federal Court last year found its "specific pain range" misled consumers because they all contained the same active ingredient and did the same thing.
The Australian Competition and Consumer Commission had asked the Federal Court to impose a fine of $6 million.
The products promised to relieve either back pain, period pain, tension headache or migraine, even though it is not possible to target pain relief in such a manner.
The ACCC, Katrina Banks-Smith SC, said Reckitt Benckiser made "substantial profits" from its misleading marketing.
The pain-specific products were sold at almost double the price of Nurofen's standard range.
Colgate hit with $18 million in fines
The fine comes after the Federal Court ordered Colgate-Palmolive Pty Ltd (Colgate) pay total penalties of $18 million for contraventions of the Trade Practices Act 1974 (now called the Competition and Consumer Act 2010) (the Act).
Colgate admitted to entering understandings which limited the supply, and controlled the price, of laundry detergents, and agreed with the ACCC to joint submissions on penalty being put to the court.
"By ordering these substantial penalties, the Court has recognised the seriousness of this conduct, which affected the supply and pricing of laundry detergents, a consumer staple, ACCC Chair Rod Sims said in a statement.
"The information sharing understanding involved phone calls between senior managers of competing companies, many of which started as social calls, but turned to unlawful exchanges of pricing information.
" Any contact between competitors carries risk and while discussion of price is particularly serious, there are many topics which may lead to an anti-competitive understanding."
"This is the equal third largest penalty that the court has ordered for breaches of the competition provisions of the Act and is an indicator of how seriously the court views the conduct," Mr Sims said.
Colgate admitted that it made, and gave effect to, an understanding with Unilever Australia Limited (Unilever) and PZ Cussons Australia Pty Ltd whereby they agreed to cease supplying standard concentrate laundry detergents in early 2009 and supply only ultra concentrates from that time.
Colgate also admitted that it and Unilever shared sensitive market information, including information about when they would increase the price of their laundry detergents through telephone contact between Mr Ansell and senior Unilever executives, including Unilever's sales director at the time.
The penalties ordered against Colgate comprise $12 million for the understanding to withhold supply, and $6 million for the information sharing understanding.
The ACCC has also, by consent, resolved its proceedings against Mr Paul Ansell, a former Colgate sales director, who has admitted to being knowingly concerned in the same conduct.
By consent, the Court also ordered that Mr Ansell be disqualified from managing corporations for seven years and pay a contribution of $75,000 towards the ACCC's costs.
The Federal Court also made other orders by consent that Colgate update its trade practices compliance program and maintain that program for three years and pay a contribution of $450,000 towards the ACCC's costs.