On July 20, 2023, Cohen Milstein filed an antitrust class action in the United States District Court for the District of New Jersey on behalf of direct purchasers of fragrances against Firmenich, Givaudan, International Flavors & Fragrances (IFF), and Symrise, the four largest global manufactures of flavors and fragrances.
Plaintiffs allege that since January 1, 2012, the four fragrance manufacturers colluded to restrain competition by fixing, raising, stabilizing, and maintaining the prices of fragrances and fragrance ingredients in an already highly consolidated market, in part by allocating customers among themselves and allocating specific fragrances and fragrance ingredients that each of them would produce (and that the others would not produce).
Plaintiffs seek treble damages arising out of Defendants’ conspiracy.
Together, Firmenich, Givaudan, IFF, and Symrise operate in an approximately $26.5 billion worldwide market. The fragrance market in the United States alone is valued at approximately $8.7 billion. Defendants collectively hold approximately 64% of the global flavors and fragrances market, and between 66-70% of the global fragrances market. They hold substantially similar shares of the respective United States markets.
Unfortunately, the fragrance manufacturing industry is susceptible to collusion. The industry is highly consolidated. There are high barriers to entry, preventing new entrants from joining the market. Also, the demand for fragrances is inelastic—meaning customers are unlikely to switch to substitute products (which do not exist) in the event of a price increase. And Defendants have remarkably cozy relationships. For instance, they have formed a trade association together, Fragrance Science & Advisory Council, which for a time included no other members and has only ever added one additional member in its history.
In recent years, due to advancements in technology, Defendants have faced a threat to their historic market dominance and high profits: competitors’ ability to cheaply and efficiently reverse-engineer and replicate Defendants’ fragrances, except for those fragrance molecules which they have invented and patented.
Rather than combat this threat through competitive means, however, Defendants, beginning at least as early as 2012, unlawfully conspired to reduce this threat. To limit competition from each other, each Defendant agreed not to copy the others’ fragrances, and to produce only some of the synthetic and natural fragrance ingredients used to make fragrances. Through this production allocation agreement, Defendants have restricted price competition among each other, forcing their customers to pay higher prices for fragrances and fragrance ingredients.
The conspiracy was effectuated by direct company-to-company contacts among the manufacturers, as well as joint activities undertaken through trade associations such as the International Fragrance Association.
Defendants’ conspiracy to inflate the price of fragrances by allocating products and customers harmed Plaintiff and members of the Class, who have purchased billions of dollars’ worth of fragrances from them. Plaintiff and the Class are the direct purchasers of fragrances and fragrance ingredients from Defendants. Plaintiffs and other Class members are entitled to damages and all other remedies permitted by law.
Case name: Crimson Candle Supplies v. Firmenich, et al., Case No. 2:23-cv-02174, United States District Court for the District of New Jersey