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Shares in Givaudan and Symrise were hammered today 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, US-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.
It also designs 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 last night, when Givaudan confirmed it was being investigated.
Symrise shares, which today forecast a 2023 core profit margin slightly below market expectations, dropped 3.7%, 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% and DSM lost 3.5%, underperforming a 1.3% decline in the STOXX Europe 600 Chemicals index, while US-listed International Flavors & Fragrances (IFF) was down 2.9% at last night’s close.
COMCO said several raids were carried out in conjunction with the European Commission, the US 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 this week 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”.
Symrise said today it had a 12% share of the combined market for fragrances, flavours, aroma chemicals and cosmetic ingredients last year, with Givaudan, IFF and Firmenich accounting for 18%, 22% and 11%, respectively.
The German company added that fragrances accounted for 13.2% of the €39 billion overall market, working out to €5.1 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.
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