Breaking News on Confectionery & Biscuit Processing

Germany busts choc giants for price fixing; ordered to pay €60m

By Oliver Nieburg+

01-Feb-2013
Last updated the 04-Feb-2013 at 13:34 GMT

Nestlé, Kraft, Ritter and others were found to have illegally raised prices for chocolate
Nestlé, Kraft, Ritter and others were found to have illegally raised prices for chocolate

Eleven chocolate companies including Nestlé and Kraft have been fined over €60m ($82m) for colluding to raise chocolate prices in Germany, while price fixing investigations continue in the US and Canada.

Germany’s federal competition agency, Bundeskartellamt, found the companies liable for several cartel infringements that saw chocolate prices rise in 2007.

Nestlé has told this site that it intends to appeal, while Kraft has reached a settlement with authorities.

As the initial whistleblowers, Mars and Ritter have escaped financial penalty. The other companies involved are Bahlsen, Griesson de Beukelaer, Storck, Katjes Fassin, CFP Brands Süßwarenhandels, Feodora Chocolade, Piasten and Zentis.

Cartel price fixing

Andreas Mundt, president of Bundeskartellamt said: "In 2007, prices for important raw materials for the production of chocolate, such as milk and cocoa, increased significantly.

“Obviously, some of the companies wanted to make sure that they could directly pass on their increased costs to the consumers. Instead of finding an entrepreneurial solution, the companies opted for illegal measures. Competition with rivals was simply eliminated and customers burdened with coordinated price rises."

Nestlé plans appeal

Nestlé Deutschland said it will appeal the decision to the Higher Regional Court of Düsseldorf.

“We believe that the Federal Cartel Office’s allegations are not justified, and we fundamentally disagree with the way in which the authority has applied the competition act in this case,” said the company.

Kraft settles

But Kraft has accepted its punishment. Barbara Blohberger, Kraft (Mondelez) head of corporate affairs in Germany, told ConfectioneryNews.com: “We have a to pay a fine…We have a settlement with the German cartel office.”

She refused to confirm the settled amount but the initial fine was €21.7m.

First count

According to German authorities, Kraft and Ritter exchanged telephone calls between March and September 2007 informing one another about intended price increases.

The chocolate makers raised selling prices for 100g bars by 15-20% the following year and the recommended retail price (RRP) was upped by 10 to 15 euro cents.

Second count

The cartel office added that senior employees from Mars, Nestlé, Ritter and Schokoladen met regularly in 2007 to agree on price hikes for chocolate products.

Price increases of around 10% were implemented and facilitated mainly by downsizing packet contents, said authorities.

Raids of the company offices in Feburary 2008 uncovered documents suggesting a conspiracy to raise prices.

Fines amounting to €19.5m ($27m) have been imposed for this offence. Haribo was also involved in the negotiations and was fined €2.4m ($3.3m) for its part last summer. See HERE.

Third count

Mars and Ritter along with several smaller confectioners were also found to have informed one another about the state of negotiations with retailers between 2004 and 2008, and also exchanged planned increases in list prices at a working group of conditions association of German confectionery.

The companies were fined €19.6m for this count.

Nestlé, Mars and Kraft are also facing an antitrust lawsuit in the US that alleges the companies conspired together to fix chocolate prices in the US between 2002 and 2008. See HERE.

In another case, the Canadian Competition Bureau is currently investigating chocolate price fixing allegations in Canada from 2007.

Key Industry Events

 

Access all events listing

Our events, Events from partners...