Leading manufacturers of fragrances and flavorings have been targeted by competition authorities on suspicion of price fixing. On Tuesday evening, the EU Commission announced that it had started a competition procedure in the industry, but did not name any names. The Swiss Competition Commission Weko confirmed its own cartel investigation against several manufacturers and on Wednesday morning named the Swiss manufacturers Firmenich International and Givaudan, the German Dax group Symrise based in Holzminden in Lower Saxony and the US manufacturer International Flavors as affected companies
Fragrances are used in the manufacture of numerous products, including in particular cosmetics and personal care products as well as detergents and cleaning products.
According to the EU Commission, it is concerned that “companies and an association in the fragrance industry could have violated EU competition law worldwide, which prohibits cartels and restrictive business practices.” When asked, Symrise confirmed that it had been contacted by the European Commission in connection with investigations into possible price agreements in the fragrances and flavors sectors. But there are no details yet. Symrise cooperates fully.
violation of antitrust laws
Weko said there were indications “that several companies that are active in the production of fragrances (“fragrances”) have violated antitrust law”. There are suspicions that they coordinate their pricing policy, prevent their competitors from supplying certain customers and limit the production of certain fragrances.
According to Weko, there were house searches at various locations. These were carried out in coordination with other competition authorities, namely the EU Commission, the US Department of Justice Antitrust Division and the British Competition and Markets Authority. As part of the investigation, it should be checked whether there are actually restrictions on competition that are inadmissible under antitrust law. The presumption of innocence applies to companies.
Such investigations usually drag on for a long time, said analyst Celine Pannuti from the bank JPMorgan. At the same time, possible fines would not have to be as high as the rules of the EU Commission suggested. The EU Commission states that penalties in antitrust proceedings generally account for 15 to 20 percent of the sales affected, with an upper limit of ten percent of the annual sales of the companies concerned.
Business figures from Symrise
The presentation of the final business figures and the annual outlook from Symrise receded somewhat into the background in view of the investigations. The company expects profitability in 2023 to be at the lower end of its medium-term target range. CEO Heinz-Jürgen Bertram calculates that raw material costs will increase moderately. As early as 2022, the company felt an increase in raw material, logistics and energy costs.
In 2022, as has been known since January, the operating profit margin fell from 21.3 to 20.0 percent – and this includes an impairment of 126 million euros on the almost 30 percent stake in pet food specialist Swedencare. Excluding this special charge, operating profit rose by a good 13 percent to 922 million euros in 2022. The bottom line is that Symrise earned EUR 406 million, a good 8 percent more than in the previous year.
Overall, Symrise grew by more than a fifth in 2022 to sales of EUR 4.618 billion. Under our own steam – i.e. excluding takeovers and exchange rate effects – the plus amounted to 11.4 percent. Up to 2025, the company’s management calculates an average annual organic growth of 5 to 7 percent.
