India Investigates Major Fragrance Companies Over Alleged Worker Poaching Deals

Indian Antitrust Watchdog Investigates Global Fragrance Makers Over Labour Practices

The Competition Commission of India (CCI) has launched an investigation into global fragrance makers Givaudan, Firmenich, and International Flavors & Fragrances (IFF) over allegations of anti-poaching deals that restrict job opportunities and wages.

The investigation, which began in August 2023, was initiated after one company approached the CCI under a leniency programme, which offers confidentiality and lower penalties in exchange for proof of wrongdoing. The watchdog has reviewed at least 30 emails, which suggest that the firms had an understanding, known as a gentlemen's agreement, not to hire or poach employees from rivals or customers.

The alleged coordination took place via emails, phone calls, and chats, and may have been ongoing since 2002. The CCI will investigate the matter and prepare a report, a process that can take over a year. The watchdog is seeking details of recruitment processes, job advertisements, and email exchanges with rivals.

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Industry Overview

The fragrance industry creates fine fragrances for brands such as Hugo Boss and Gucci, as well as aromas for household products for companies like Procter & Gamble and Colgate-Palmolive. The Indian flavours and fragrances market is expected to nearly double in value by 2033, reaching $5 billion from $2.5 billion in 2024, according to Grand View Research.

Regulatory Risks

The CCI has the power to order financial penalties of up to three times a company's profit, or 10% of an Indian entity's global turnover, whichever is higher, for each year of wrongdoing. The companies involved have stated that they are cooperating with investigators, but the CCI has not yet made any public comments on the investigation.

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Company Updates

IFF has stated that it is "fully cooperating" with the CCI's requests for information and has vowed to "engage constructively in the legal process". DSM-Firmenich, formed from the 2023 merger of Dutch specialty chemicals maker DSM with Firmenich, declined to comment. Givaudan and the CCI did not respond to Reuters queries.