Candle Businesses Face Hurdles With Fragrance Price-Fixing Cases

Several American candle makers face rigorous legal standards as they try to seize on the regulatory troubles of global fragrance suppliers by filing their own follow-on lawsuits.

European authorities are investigating four of the largest suppliers of scents and ingredients—Givaudan SA, International Flavors & Fragrances Inc. (IFF), Symrise AG, and Firmenich International SA—to see if they colluded on prices. The investigations, which also involve US authorities, have prompted the candle businesses to file lawsuits with claims that they were forced to pay artificially high prices for fragrances used in their products.

But lawsuits that follow investigations without their own specific claims face tough legal standards, attorneys and legal experts say.

Any findings from the investigations could potentially bolster their price-fixing claims. But the plaintiffs—Candle Shoppe of the Poconos Inc., Our Own Candle Co., Keystone Candle Co., and Hanna’s Candle Co.—must also come up with their own set of facts and conclusive evidence to avoid a motion to dismiss in the US, attorneys say.

“Courts are increasingly demanding smoking gun evidence,” said Diana Moss, president of the American Antitrust Institute. “There has to be an explicit agreement to fix prices or allocate markets.”

As written currently, the suits suggest there was information exchange among the fragrance companies but provide no evidence of collusion, said Barak Orbach, Robert H. Mundheim professor of law and business at the University of Arizona James E. Rogers College of Law.

“They do not have any evidence of information exchange, and they don’t have any evidence of communication,” he said.

The four fragrance giants have a combined market share of about 60% to 70%, plaintiffs say. The fragrance businesses have acknowledged that they raised prices but said that was largely due to inflation, global supply chain disruptions, and higher material costs.

James E. Cecchi, an attorney with Carella, Byrne, Cecchi, Brody & Agnello, P.C. who is the common lawyer representing the four candle businesses, didn’t respond to requests for comment.

Twombly Standard

The candle businesses—which use scents in their candles, potpourri, and air fresheners—view the European probes as a major building block in their lawsuits. They argue in their suits that they believed the fragrance supply industry to be competitive until the investigations began.

Private plaintiffs like the candle companies increasingly face heavy burdens of proof due largely to “the Twombly plausibility standard,” said William Kovacic, a former Federal Trade Commission chair and current professor at George Washington University Law School.

The Twombly standard says that “when you file your complaint, you have to allege enough facts and offer enough arguments to lay out any plausible theory of conspiracy,” Kovacic said. “Not just ‘it was possible.’ You’re going to have to show that it was likely or probable.”

For defendants, the Twombly ruling is “wonderful news because it enabled you to knock the case out before you even had to answer the complaint,” Kovacic said.

Still, that doesn’t deter some private plaintiffs from filing a suit after a government investigation is revealed.

Plaintiffs are particularly eager to file a suit when there is a grand jury investigation, said Gordon Lang, a former Department of Justice lawyer who leads Nixon Peabody’s antitrust practice.

Earlier this year, IFF said in a financial filing that it received a grand jury subpoena from the Justice Department’s antitrust division.

The DOJ also worked with the European Commission and Swiss and UK authorities to coordinate the raids on the fragrance makers, according to Bloomberg News.

The candle business plaintiffs are hoping to use any findings to bolster legal claims that the fragrance companies coordinated pricing policies, Lang said.

“In the US, were some of the companies to be convicted, that would give the plaintiffs a huge leg up in an action,” Lang said. “The plaintiffs would argue there is what is known as collateral estoppel, which means that the companies can’t argue they didn’t commit the act if they’ve been convicted.”

The plaintiffs’ attorneys are hoping that the investigations will move forward quickly, so that any discovery from the raids could be used to enhance their lawsuits, Orbach said.

“They think the real evidence is likely to come in the future,” Orbach said.

Attorneys for Givaudan and Symrise didn’t respond to inquiries for this story.

A Firmenich spokesperson said in an email that the company had no comment beyond its statement in March, when it said it was “fully cooperating with the investigators.”

IFF said in a statement that it couldn’t comment on specific details, but is “working closely with relevant authorities.”

DOJ and European Commission officials didn’t respond to requests for comment.

The case is Our Own Candle v. Givaudan S.A., D.N.J., No. 3:23-cv-02174, 4/18/23.

The case is Candle Shoppe of the Poconos Inc. v. Givaudan S.A., D.N.J., No. 2:23-cv-03049, 6/2/23.

The case is B&E Associates Inc. v Firmenich SA, D.N.J., No. 2:23-cv-03050, 6/2/23.

The case is Hanna’s Candle Co. v. International Flavors & Fragrances Inc., D.N.J., No. 2:23-cv-03266, 6/14/23.