Chocolatiers face price fixing lawsuits

By Charlotte Eyre

- Last updated on GMT

Related tags: Chocolate, Competition, Pricing, Hershey

Chocolate giants Mars, Hershey, Nestle and others have had lawsuits
filed against them in the US, after the companies were investigated
for price fixing last year, according to news reports.

The leading global confectioners first came under investigation in the country in November 2007, when the Canadian Competition Bureau asked them to hand over documents regarding their pricing strategies. The Competition Bureau said at the time there was no indication as yet of any wrongdoing and no charges had been bought against any companies. However, three lawsuits in total have now been filed in federal courts last month - one in New Jersey by the CNS Confectionery company and Winn Corp, while the other lawsuits were filed in Pennsylvania, according to the Associated Press. Mars, Hershey and Nestle did not comment in time for publication. The case will increase the financial pressure on these confectionery companies, many of whom are already struggling with higher commodity prices. Last summer, cocoa prices reached their highest levels since 2003 - averaging $2,017 (€1,484) per tonne, up by $12 (€8.8) on May's monthly average. Several manufacturers blamed the rising price of milk and cocoa, at least in part, for squeezed profits in 2007, including Hershey, which suffered a massive 22.7 per cent drop in margins for the year's third quarter results. While consumers have not really felt the effect of rising commodity costs just yet, Lindt, the Swiss-based chocolate company warned in August that it plans to increase product prices in order to cover rising raw material costs. Also the situation is unlikely to improve any time soon, as according to the International Cocoa Organisation (ICCO), the cocoa deficit is now greater than was previously thought. The global production deficit is now estimated at 242,000 tonnes, compared with the earlier projected figure of 156,000 tonnes, due to adverse weather conditions in Africa and South America, the ICCO said.

Related topics: Markets

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