Whiff of price rigging on the beauty shelves
Supermarkets said they were being refused supplies of the products
by fragrance houses determined to maintain high margins at customers'
expense. Meanwhile, department stores are coming under scrutiny because
of their willingness to accept the demands of the beauty industry.
Concern about the practices of the fragrance and cosmetics houses
follows an inquiry in France in which 13 leading brands were fined £32m
for price fixing after they were found using heavy-handed tactics to
rig the market.
A price comparison by The Sunday Times into cosmetics from five
brands — Chanel, Christian Dior, Estée Lauder, Lancôme and Yves Saint
Laurent (YSL) — found an uncanny uniformity in the prices. A survey by
Which?, the consumer association, found a similar pattern.
Edward Davey, the trade and industry spokesman for the Liberal
Democrats, called on the Office of Fair Trading to conduct an
investigation into the industry. "It looks like women across Britain
are being denied value for money when they buy cosmetics because
competition and choice are being stifled," he said.
The OFT said it would consider any evidence. Under European case
law, cosmetics houses are allowed to choose who sells their products to
protect the brand's luxury image.
British supermarkets are forced to turn to the "grey market" — where surplus goods from European outlets are sold in Britain.
The department stores are given recommended retail prices for every
product. House of Fraser said that it negotiated with the cosmetics
firms before it offers discounts.
The uniformity of prices found by researchers suggests that recommended retail prices are being rigorously enforced in Britain.
A survey carried out by The Sunday Times on five products in London
stores found that there was no point in shopping around. Top-end brands
of eyeliner, foundation, blusher, concealer and eyeshadow from YSL and
Chanel were the same price across the capital, in stores ranging from
Harvey Nichols to Boots, House of Fraser and John Lewis.
YSL's L'eyeliner cost £18.50 in every store and Chanel's Vitalumiere
Fluide foundation cost £22 everywhere. Estée Lauder's Pure Colour
liquid eyeliner cost £17 in every store and Dior's Crayon à Sourcils
eyeliner cost £12.50 in the four stores where it was available. The
largest price difference found for any product was £2.
Estée Lauder, YSL and Chanel last week denied any suggestion that
they rigged their prices, insisting that the pricing of products was
down to the discretion of the retailer.
L'Oréal, which owns Lancôme, said there was "great diversity" in
retail prices. Louis Vuitton Moët Hennessy, which owns Dior, declined
Simon Williams, senior health and beauty buying manager at Tesco,
said: "Because the continental cosmetics houses know Tesco will sell
their brands at very competitive prices, they won't supply us."
David Miles, business director of health and beauty products at
Asda, said: " I think consumers are being ripped off. These companies
are operating a closed shop where they are hiding behind strict
criteria to stop retailers like us discounting products."
Euromonitor, the research firm, estimates that the average mark-up for premium skincare products and cosmetics is 78%.