‘Cartel’ of Fragrance Manufacturers Conspired to Artificially Inflate Prices by Eliminating Competition, Class Action Alleges

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A proposed class action claims the world’s largest manufacturers of flavors and fragrances—DSM-Firmenich, Givaudan, International Flavors & Fragrances (IFF) and Symrise—have since at least 2012 illegally conspired to inflate the prices of fragrances and fragrance ingredients.

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The 53-page lawsuit says the defendants collectively rely on about 3,000 ingredients to produce fragrances that customers like Procter & Gamble, Unilever or LVMH purchase to use in perfumes, cosmetics, toiletries, soaps, detergents, household cleaners, air fresheners and other consumer products. 

However, according to the suit, the defendants have each agreed to produce only a portion of the total ingredients used to make fragrances—leaving them unable to compete for contracts with customers that require fragrance ingredients they do not produce.

“In other words, if a customer puts out a request for a fragrance requiring a specific ingredient, only some (or one) of Defendants will be able to produce it and, therefore, only some (or one) of Defendants will compete for that contract,” the case says. The arrangement leaves customers with “fewer (or only one) options to produce their fragrance,” the filing adds.

By suppressing or eliminating competition in the fragrance and fragrance ingredient market, the defendants’ scheme has allowed them to consistently increase their prices far above competitive levels over the past several years, the complaint contends.

Per the suit, the companies’ decision to conspire was likely spurred by the development of technology that allows manufacturers to reverse-engineer a competitor’s fragrance formulas and sell those fragrances to customers.

“Absent an agreement to allocate customers and/or products to restrain price competition, Defendants’ ability to copy each other’s fragrances would encourage robust price competition between Defendants to win clients for specific fragrances, thereby driving down prices for those same fragrances,” the suit explains.

The filing argues that the defendants—which collectively control approximately 66 to 70 percent of the global fragrance market while maintaining “remarkably cozy relationships”—operate within an industry that is particularly susceptible to collusion. As the case tells it, Firmenich, Givaudan, IFF and Symrise frequently participate in trade associations and attend industry events where executives are provided significant opportunities to organize and maintain their “cartel.”

Concerns surrounding the defendants’ suspected anticompetitive behavior came to a head on March 7, 2023, when the European Commission raided several facilities belonging to Firmenich, Givaudan, IFF and Symrise, the suit relays. The raids, which were carried out in consultation with the U.S. Department of Justice (DOJ), the UK Competition and Markets Authority and the Swiss Competition Commission, were sparked by reports that the defendants had violated European Union antitrust rules prohibiting cartels, the complaint says.

“Because Defendants have such high collective market share, a cartel that allocates customers and agrees not to make specific products artificially reduces price competition,” the lawsuit reads. “It therefore ensures that Defendants can sell their fragrances and fragrance ingredients at artificially elevated prices.”

The filing adds that IFF—the only defendant with a parent company incorporated in the United States—received a grand jury subpoena from the Antitrust Division of the DOJ the same day the raids were conducted.

The lawsuit looks to represent all persons or entities that purchased fragrances or fragrance ingredients directly from any of the defendants or their subsidiaries or affiliates in the United States, its territories or the District of Columbia since January 1, 2012 until the effect of the conspiracy ceased. The case specifies that this includes those who bought fragrances or fragrance ingredients outside the United States but were billed or invoiced for purchases that were imported into the country.

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