German authority suspects chocolatiers of price fixing

By Charlotte Eyre

- Last updated on GMT

Related tags Cartel Competition Chocolate Nestlé

The Federal Cartel Office in Germany has raided the offices of
several confectionery giants over allegations of fixing the price
of chocolate, according to news reports.

UK newspaper The Independent said this morning that Mars, Nestle, Kraft and Ritter have all confirmed they are part of the investigation, and could face multimillion-pound fines if found guilty. A spokesperson from the Cartel office told the newspaper that she believed that the companies in question were suspected of collusion over price rises, and that a decision is likely to be made over the coming months. Many food companies have, in recent months, increased consumer prices, as commodity costs rocketed during 2007 all over the world. However, German cartel office alleges that the price rises by Mars, Nestle, Kraft and Ritter were higher than the increase in raw materials. The accusations come only weeks after Mars and Nestle, along with Hershey, were investigated for similar actions in Canada. The Canadian Competition Bureau asked them to hand over documents regarding their pricing strategies in November, and the companies in question now face lawsuits filed by irate smaller competitors. 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 during its third financial quarter. 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, the ICCO said.

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