Canada Accuses Nestle, Mars of Chocolate Price-Fixing

Canada Accuses Nestle, Mars of Chocolate Price-Fixing

Competition Commissioner John Pecman called the companies' alleged actions "egregious anti-competitive behavior that harms Canadian consumers." Officials said Hershey Canada Inc., an alleged co-conspirator, cooperated with its investigation and agreed to plead guilty at a hearing on June 21 in exchange for leniency. Nestle, Mars and five other companies faced a similar price-fixing probe in Germany in 2008.

OTTAWA - Canadian authorities charged Nestle (IW 500/37), Mars and a network of independent wholesale distributors Thursday over an alleged criminal conspiracy to fix the prices of leading chocolate brands.

Competition Commissioner John Pecman called their alleged actions "egregious anti-competitive behavior that harms Canadian consumers" and "a serious criminal offense."

A whistleblower triggered an investigation that uncovered "evidence suggesting that the accused conspired, agreed or arranged to fix prices of chocolate products," the Competition Bureau said in a statement.

Three individuals were also charged: Robert Leonidas, former president of Nestle Canada; Sandra Martinez, former president of Confectionery for Nestle Canada; and David Glenn Stevens, head of Canadian food distributor ITWAL.

If convicted, they face a fine of up to Can$10 million (US$9.75 million) and/or imprisonment for a term of up to five years.

Hershey Canada Agrees to Plead Guilty, Officials Say

Officials said Hershey Canada Inc., an alleged co-conspirator, cooperated with its investigation and agreed to plead guilty at a hearing on June 21 in exchange for leniency.

A fifth unnamed company that claimed to be part of the cartel revealed the scheme to the Competition Bureau. It did so as part of a program offering immunity to the first party to disclose an offense not yet detected or to provide evidence leading to charges, Pierre Yves Guay, a spokesman for the Competition Bureau, told AFP.

The alleged price-fixing involved chocolate bars sold across Canada from 2002 to 2008, he said, including Kit Kat, Coffee Crisp, Aero, Twix, Snickers, Bounty and M&Ms.

"It's difficult, however, to estimate the amount of the overcharging because of the complexity of the pricing in that market," he said.

How the scheme worked is expected to be revealed at Hershey's trial.

In a statement Nestle, however, said these were old allegations and vowed to "vigorously defend" itself.

Nestle, Mars and five other companies faced a similar price-fixing probe in Germany in 2008, after almost simultaneous sharp price increases of up to 25% for chocolate and confectionery. German police raided their offices.

The groups cited the rising cost of raw materials for the price increases.

Earlier this year, Nestle was fined along with 10 other chocolate and confectionery companies a total of 60 million euros (US$79.5 million) for colluding to raise chocolate prices in Germany while a Mars subsidiary avoided penalties by cooperating with German authorities.

Copyright Agence France-Presse, 2013

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