Mars and Nestlé have been charged by the Canada’s competition watchdog for allegedly fixing the price of chocolate.
The Competition Bureau laid criminal charges against Nestlé Canada, Mars Canada and ITWAL Limited, a national network of independent wholesale distributors.
Hershey will be dealt with leniently after cooperating with authorities and is expected to plead guilty for its role in the alleged conspiracy on 21 June 2013.
The first party to disclose evidence of an undetected offence can be immune from prosecution under the Bureau’s immunity program, while any subsequent cooperating parties may receive lenient treatment.
Mars and Nestlé to defend
Mars and Nestlé both intend to defend the charge, which dates back to events that took place around 2007.
Nestlé said in a statement: “Nestlé Canada will vigorously defend these charges. At Nestlé Canada, we pride ourselves on operating with the highest ethical business standards.”
Mars Canada also said that it would “vigorously defend itself against these allegations” but refused to comment further.
Hershey Canada said in a statement:"Hershey Canada promptly reported the conduct to the Competition Bureau, cooperated fully with its investigation and did not implement the planned price increase that was the subject of the 2007 communications."
It said it regretted its involved in the incident and said that the actions were limited to the Canadian marketplace.
"The current Hershey Canada senior management team as well as The Hershey Company and its management had no involvement in this conduct," it said.
There are also three individuals charged in the case. They are Robert Leonidas, former president of Nestlé Canada; Sandra Martinez, former president of confectionery for Nestlé Canada; and David Glenn Stevens, president and CEO of ITWAL.
The parties could face fines up to $10 million and/or imprisonment for a term of up to five years.
Punishments could have been more severe under new legislation, up to $25m fines and/or imprisonment for up to 14 years, but the alleged conduct took place under old rules.
The criminal charges follow a $50m lawsuit launched in 2008 in Canada by claimant Aizik Ebert, who alleged Hershey, Mars, Nestlé and Cadbury Schweppes colluded to raise the price of their products by 5% on multiple occasions.
US lawsuit and German price fixing
This is not the first time chocolate giants have become embroiled in allegations of chocolate price fixing
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 country between 2002 and 2008. See HERE.
Also, in February this year, eleven chocolate companies including Nestlé and Kraft (now Mondelez) were fined over €60m ($82m) for colluding to raise chocolate prices in Germany. See HERE.
Mars was also involved in the case but escaped financial penalty as one of the initial whistleblowers.