L’Oréal is party to several material disputes, described below:
In January 2015, decree 8.393/2015 stated that commercial companies in Brazil would be liable for the indirect IPI tax on certain products as from 1 May 2015. L’Oréal is challenging the legal grounds of this decree and its application. In light of changes in market practices and a favourable change in the opinion of its advisers, since 1 January 2018 L’Oréal has recognised the IPI collected under income.
L’Oréal received tax reassessment notices regarding the indirect IPI tax for financial years 2008 and 2011 to 2015 totalling €711 million, including interest and penalties. The Brazilian tax authorities are questioning the ex-works sales price to the commercial arm used to calculate the IPI tax base. After consulting with its tax advisors, L’Oréal considers that the Brazilian tax authorities’ position is unfounded and has challenged these notices. L’Oréal continues its legal proceedings with the tax and legal authorities.
In light of the negative developments in administrative court decisions on the same matter for other Brazilian groups, L’Oréal funded a provision for €47 million to partially cover this risk.
L’Oréal received several tax reassessment notices regarding financial years 2007/08 to 2017/18 and 2019/20 for the most part concerning the tax deductibility of advertising, marketing and promotional expenses for a total amount of €213 million including interest and penalties. After consulting with its tax advisors, L’Oréal decided to contest these notices and continues the legal proceedings with the administrative and legal authorities.
Mutual agreement procedures were instigated vis-à-vis the French, Indonesian and Singaporean tax authorities in order to eliminate double taxation following disagreements between these authorities.
The Italian procedure has just been resolved, the tax administrations having agreed to eliminate double taxation.
The national competition authorities in several European countries have launched investigations targeting the cosmetics industry in particular.
In Greece, in its decision passed down on 4 October 2017, the Greek competition authority condemned L’Oréal Hellas to pay a fine of €2.6 million for carrying out anti-competitive practices in 2005-2006. L’Oréal Hellas refuted all allegations of having engaged in anti-competitive practices with other luxury cosmetics manufacturers. The Greek Administrative Court of Appeal quashed this decision on 5 November 2018. The Greek competition authority lodged an appeal in cassation against this decision on 28 January 2019. This appeal was rejected by the Greek Council of State by a ruling on 2 August 2023. This case is therefore definitively closed.
In Germany, after the German competition authority filed a lawsuit in 2008 in the area of personal care products, which was definitively closed in 2015, distributors filed a lawsuit seeking damages against L’Oréal Germany which has resulted in dismissals by the courts at this stage. These proceedings are still ongoing. L’Oréal Germany is contesting the merits of these claims and denies that any damages occurred.
In France, on 18 December 2014, the French competition authority handed down a fine of €189.5 million against L’Oréal in the hygiene products sector for events that took place in the early 2000s. On 27 October 2016, the Paris Court of Appeal upheld this first instance decision. L’Oréal refutes all accusations of concerted practices with its competitors and regrets that the French competition authority did not take into account the highly competitive French market in household and hygiene products as illustrated by the number of manufacturers and retailers present on the market, the large choice of products available to consumers, and the high degree of innovation and number of product launches.
Following an appeal lodged by L’Oréal, on 27 March 2019, the Court of Cassation partially overturned the ruling relating to the amount of the fine imposed on L’Oréal. On 18 June 2020, the Second Court of Appeal confirmed the initial amount of the fine. L’Oréal lodged a second appeal with the Court of Cassation against this ruling that was rejected on 18 October 2023.
This final ruling has no impact on the Group's income statement and no cash flow impact, as the fine was paid in 2015.
Following this ruling, the distributors filed lawsuits for damages against L’Oréal. These proceedings are in initial stages or resulted in dismissals by the courts. These proceedings are still ongoing. L’Oréal contests the merits of these claims and denies that any damages occurred.
At the present time, no other exceptional events or disputes are highly likely to have a material impact on the earnings, financial situation, assets, or operations of the Company or the L’Oréal Group.
