Luxury Cosmetics and Perfumes: What the Competition Authority’s Investigation Reveals

A new competition case has emerged, this time involving the highly discreet market of luxury cosmetics and perfumes. One of its operators has referred the matter to the Competition Authority over alleged anti-competitive practices. Several companies involved in the distribution of luxury perfumes and cosmetic products stand accused. The Council, chaired by Ahmed Rahhou, has not disclosed the names of the parties involved. The alleged offenses relate to situations of economic dependence, barriers to price formation, unilateral and abusive termination of commercial contracts, and explicit or tacit collusion. These are major breaches, on par with abuse of dominant position and price-fixing agreements—offenses that lie at the very core of the law on price freedom and competition. This is why they are both prohibited and sanctioned by the legislator, making this case particularly serious. Other indicators reinforce this assessment, including the scale of the practices and the number of alleged actors involved.
“The market is structured around several players operating at different levels of the value chain… First, there are suppliers who are not directly present in the retail market. They rely on authorized retailers to market their products. Then there are operators adopting a more integrated model based on importation, distribution, and retail,” the regulator explains.
This is the broader framework within which the investigation has identified anti-competitive practices that “go beyond” the initial scope of the complaint. “These competition concerns affect the overall functioning of the distribution of luxury cosmetics and perfume products,” investigators note. The scale of the identified practices suggests a major case. Five examples illustrate this.
First, the risk of discrimination arising from the application of differentiated commercial conditions between retailers. Such discriminatory practices can lead to contract terminations, often to the detriment of the economically weaker party.
Second, the potential use of tying sales, where a retailer is required to purchase one product in order to obtain another, even if it is not needed.
Third, “risks of foreclosure or market lock-in” targeting independent or non-compliant resellers, notably through “withholding strategic products or exclusion mechanisms within selective distribution networks.”
Fourth, “potential exchanges of sensitive strategic information.” This type of practice can distort free competition. It was notably observed in the case involving oil companies and their professional association, the GPM (see L’Economiste, No. 5815, August 3, 2020). Fifth, the existence of monitoring or incentive mechanisms. “These aim to standardize retail prices—so-called ‘recommended or imposed prices’—and resemble a form of price policing,” investigators state. Such practices constitute a violation of the law on price freedom and competition and were also highlighted in the hydrocarbons case.
Faiçal FAQUIHI