European regulators raided the premises of four multinational perfume companies Tuesday, March 7th, over reports of cartel-like practices within the fragrance industry. The raids are the latest example of the EU’s controversial competition regime, which has been used for Big Tech regulation and criticised for crippling innovation due to onerous demands to release trade secrets.
The European Commission confirmed that it carried out multiple unannounced inspections across the EU due to potential breaches of competition law and was liaising with regulators in America, the UK, and Switzerland.
The Swiss Competition Commission stated that they were working with UK, EU, and U.S. authorities to examine potential industrial collusion over the sourcing of ingredients. The four companies involved are all based in Switzerland. They include Firmenich International, International Flavors & Fragrances Inc, Symrise, and Givaudan, with a combined annual revenue of over €20 billion.
The global fragrance sector, which includes home and body care products and perfumes, has previously been criticised for the use of products sourced from totalitarian regimes, such as North Korea.
In its mission to create a level playing field, the Commission last week fined Google €2.42 billion for unfair market dominance due to its search engine algorithm. The tech giant has previously referred to the Commission’s investigation as “quasi-criminal” due to its long-running targeting of the firm.
Critics of the EU’s antitrust legislation say that its policies undermine innovation and force companies to divulge industrial secrets under political pressure. Under EU law, companies found to be operating cartels can be fined up to 10% of their annual revenue.
Often condemned for its heavy-handed approach to regulation, the EU launched a similar investigation into the €19 billion merger of two Spanish telecom companies on the same day as their probe into the fragrance companies.