Switzerland joins global cartel probe into $5-B fragrance market

Shares in 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, U.S.-based International Flavors & Fragrances and Germany’s Symrise.

The more than $5-billion scents industry 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.

Shares of Symrise, which on Wednesday forecast a 2023 core profit margin slightly below market expectations, dropped 3.7 percent at 0957 GMT, though the company’s chief executive said he did not expect the firm to be affected and its role was primarily that of a witness.

Givaudan dropped 3.7 percent and DSM lost 3.5 percent, underperforming a 1.3- percent decline in the STOXX Europe 600 Chemicals index, while U.S.-listed International Flavors & Fragrances (IFF) was down 2.9 percent at Tuesday’s close.

COMCO said several raids were carried out in conjunction with the European Commission, the U.S. Department of Justice Antitrust Division and the UK Competition and Markets Authority.

The Swiss agency added it acted on suspicion the companies “coordinated their pricing policy, prohibited their competitors from supplying certain customers and limited the production of certain fragrances”.

It said that 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 confirmed the group was part of the investigation and that it would cooperate with authorities.

A spokesperson for IFF said the company was “working closely with relevant authorities and cooperating with their industry investigation”.

Firmenich could not immediately be reached for comment.

Symrise said on Wednesday it had a 12-percent share of the combined market for fragrances, flavours, aroma chemicals and cosmetic ingredients last year, with Givaudan, IFF and Firmenich accounting for 18 percent, 22 percent and 11 percent, respectively.

The German company added that fragrances accounted for 13.2% of the 39 billion-euro overall market, working out to 5.1 billion euros ($5.37 billion) 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.

($1 = 0.9492 euros)