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Nestlé, Mars Accused Of Candy Price-Fixing Conspiracy in Canada

Nestlé, Mars Accused Of Candy Price-Fixing Conspiracy in Canada


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The big names in confection have taken a serious hit, as a five-year investigation into candy price fixing in Canada culminated this week in criminal charges being brought against Nestlé, Hershey, and Mars.

“Price-fixing is a serious criminal offence and today's charges demonstrate the Competition Bureau's resolve to stop cartel activity in Canada,” said John Pecman of the Canada Competition Bureau.

The candy-price shenanigans allegedly went down five years ago, in 2007.

According to NBC, Hershey Canada cooperated with the investigation by Canada’s Competition Bureau and was expected to plead guilty “for its role in the conspiracy to fix the price of chocolate confectionery products in Canada.”

The Competition Bureau has a program under which the first party to disclose a price-fixing offense like this can receive immunity from prosecution. In this case, that would seem likely to be Hershey.

“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,” the company said Thursday in an announcement.

The accused, including two former Nestlé Canada executives, face the possibility of a fine of up to $10 million and imprisonment for up to five years. The Competition Bureau said it could be willing to be lenient to subsequent cooperating parties, but Mars and Nestlé have both denied the allegations.

“Nestlé Canada will vigorously defend these charges,” Nestlé announced. “At Nestlé Canada, we pride ourselves on operating with the highest ethical business standards.”

Mars was similarly vehement in its denial.

"Mars Canada intends to vigorously defend itself against these allegations,” it said. “It is Mars Canada's policy not to comment on pending litigation and we are therefore unable to make any additional comments in relation to this matter, which is now before the court.”


$50M price-fixing suit filed against Canadian chocolate makers

A class-action lawsuit has been filed alleging several major Canadian chocolate makers are involved in a price-fixing conspiracy, a Toronto law firm announced Tuesday.

The suit filed by Juroviesky and Ricci late last week in the Ontario Superior Court of Justice seeks $50 million in damages, according to Eli Karp, an associate with the firm.

Karp said the suit has one plaintiff but potentially includes any Canadian who has consumed chocolate products since February 2004.

The suit alleges chocolate makers Nestle, Hershey, Cadbury and Mars have conspired to inflate prices by five per cent or more on at least three occasions.

Such collusion would be in violation of Canada's Competition Act and several provincial consumer protection laws.

Karp said the statement of claim alleges that "executives of the four companies exchanged price information with each other" in order to raise prices in a "conspiracy against the Canadian public."

The allegations have not been proven in court.

The firm said in a release that the claim is "the result of an extensive and independent investigation conducted by Juroviesky and Ricci." Karp confirmed such an investigation did take place but could not comment on the length of the probe.


Nestlé Canada, others charged with chocolate price-fixing

Criminal charges have been laid in a chocolate price-fixing case against market leader Nestlé Canada Inc. and others, Canada’s competition watchdog announced Thursday.

Mars Canada Inc. and the national distribution network Itwal Ltd. have also been charged, along with three senior industry executives, the federal Competition Bureau said.

The charges cap a bureau investigation lasting more than five years into Canada’s multibillion dollar a year candy industry. None of the allegations has been proven in court.

“Price-fixing is a serious criminal offence and today’s charges demonstrate the Competition Bureau’s resolve to stop cartel activity in Canada,” John Pecman, interim commissioner of competition, said in a statement.

A fourth company, Hershey Canada Inc., is expected to plead guilty on June 21 for its role in the alleged conspiracy to fix the price of chocolate confectionery products in Canada, the bureau said.

Two former senior executives at Nestlé and the current chief executive of Brampton-based Itwal were also charged, the independent law enforcement agency said.

The individuals named are Robert Leonidas, a former president of Nestlé Canada Sandra Martinez, a former president of confectionery for Nestlé Canada and David Glenn Stevens, president and chief executive officer of ITWAL.

Mars Canada, Nestlé Canada and a lawyer for Leonidas all said they intend to defend themselves against the charges. “This matter has been in the public domain since late 2007. Mr. Leonidas looks forward to his day in court where we intend to vigorously defend against these allegations,” lawyer Jay Naster, of Rosen Naster LLP, said in an email.

ITWAL chief executive Ross Robertson told the Star Wednesday evening that the company “has always carried on its business for the benefit of its member distributors in full compliance with all Canadian laws” and that it and Stevens “strongly deny the bureau’s allegations and intend to vigorously defend the charges.”

In a separate statement, Hershey Canada said it will plead guilty to one count of price fixing related to communications with competitors in 2007.

Hershey Canada said it promptly reported the alleged conduct to the Competition Bureau, co-operated fully with its investigation and did not put in place the planned price increase, which was the subject of the 2007 communications

The bureau, which said it became aware of the alleged conduct through its immunity program, has recommended that Hershey receive lenient treatment for co-operating with the investigation.

The investigation uncovered evidence suggesting the accused conspired, agreed or arranged to fix prices of chocolate products, the federal watchdog said in a statement.

The allegations cover a period from 2002 to 2008, a bureau spokesperson said.

Court documents unsealed in December, 2007, allege senior executives at Hershey, Mars and Nestlé met secretly in coffee shops and restaurants and at industry conventions to set prices.

The documents allege the chief executive of Nestlé Canada handed envelopes stuffed with pricing information to a competitor, instructing the person not to be seen picking up the material in his office.

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The maximum penalties under the act in force at the time the alleged conduct occurred were $10 million and/or five years in prison, the bureau said. The penalties have since been increased to $25 million and/or 14 years in prison.

Class-action lawsuits filed against the companies in connection with the price-fixing allegations resulted in settlements of more than $22 million, according to Siskinds, the law firm representing the plaintiffs.

Nestle Canada settled for $9 million, Cadbury Adams Canada for $5.7 million, Hershey Canada for $5.3 million, and Mars Canada for $3.2 million, documents on Siskinds’ class-action website show.


Nestle fined after German chocolate probe

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 per cent for chocolate and confectionery.

German police raided their offices. The groups at that time 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 ($83 million) for colluding to raise chocolate prices in Germany.

A Mars subsidiary avoided penalties by cooperating with German authorities.


Nestle, Mars accused of fixing Canadian chocolate prices

The accused in a chocolate price-fixing case could face a bitter fate if convicted -- millions of dollars in fines for the companies and potential jail time for the individuals.

Canada's Competition Bureau said Thursday it is laying criminal charges against Nestle Canada Inc., Mars Canada Inc. and ITWAL Ltd., a network of independent wholesale distributors.

Also charged are former Nestle Canada president Robert Leonidas Sandra Martinez, former president of confectionery for Nestle Canada and David Glenn Stevens, president and chief executive of ITWAL.

The companies and individuals are accused of conspiracy under the Competition Act.

In separate statements, both Nestle and Mars said they intend to "vigorously defend" themselves against the charges. Both said the allegations date back to 2007 and earlier.

A statement from ITWAL was not immediately available.

Hershey Canada Ltd. said it has reached a settlement with the Competition Bureau that will see it plead guilty to one count of price-fixing, which is subject to court approval.

The plea is related to communications Hershey had with Canadian competitors in 2007.

"Hershey Canada promptly reported the conduct to the Competition Bureau, co-operated fully with its investigation and did not implement the planned price increase that was the subject of the 2007 communications," the company said in a statement.

"Hershey Canada regrets its involvement in this incident as the communications were not in keeping with The Hershey Company's principles, global business practices and high ethical standards."

Hershey Canada said its current senior management team was not involved in the alleged price-fixing. It also said the conduct was limited to the Canadian division of the U.S. candy giant.

The bureau found out about the alleged scheme through its immunity program, under which the first party to disclose an offence or provide evidence may receive immunity, provided it fully co-operates.

Subsequent parties that help out in an investigation may receive lenient treatment, as Hershey did in this case.

"We are fully committed to pursuing those who engage in egregious anti-competitive behaviour that harms Canadian consumers," said interim competition commissioner John Pecman.

"Price-fixing is a serious criminal offence and today's charges demonstrate the Competition Bureau's resolve to stop cartel activity in Canada."

The Competition Act's current conspiracy provision could mean a $25-million fine and/or imprisonment of up to 14 years.

But since the price-fixing took place before tougher rules were introduced in 2010 and came into effect in 2012, the accused in this case face a fine of up to $10 million and/or a prison term of up to five years.

Under the new rules, the Competition Bureau won't have to prove anti-competitive behaviour had an "undue economic effect on the market."

But since the chocolate price fixing took place in 2007, the bureau's case must pass that test. That makes it more complicated to prove the accused broke the law.

It's tough to pin down just how much Canadian chocolate lovers overpaid for their treats as a result of the alleged price fixing.

"It's always the big tough question," said bureau spokesman Pierre-Yves Guay.

"When we're talking about overcharge, it's very difficult to estimate in this case, as true competitive prices are difficult to determine because of the complexity of the pricing in this market."


Outside the Beltway

Authorities in Canada have charged the food giants Nestle and Mars, together with a network of independent wholesale distributors, in an alleged conspiracy to fix prices of chocolates.

The Competition Bureau in the capital Ottawa said it has uncovered "evidence" suggesting price-fixing.

Nestle Canada, Mars Canada, and the distributors ITWAL have been charged.

[…]

Three individuals have also been charged as part of the investigation.

They are former Nestle Canada president Robert Leonidas Sandra Martinez, former president of confectionery for Nestle Canada and David Glenn Stevens, president and chief executive of ITWAL.

Oh dear, when the Canadians are mad at you…

About Steven L. Taylor

Comments

Actually, this is just internecine combat within Canada. For a variety of reasons, these companies have spun off operations in Canada from those in the US or Switzerland. There are even situations where a candy sold in the US under the Mars brand is made and sold by Nestle in Canada.

But these tangles have nothing to compare with the fights within the Marx family that controls the various Mars labels. UK Mars is only related by blood to the US Mars, not by conjoined management or even ownership.

Then there’s also the debate of whether these companies actually make “chocolate”.

/yes, there are chocolate snobs

In junior high, which was in the 60s, we had a reading assignment. It was a business story by a guy who found out about bad weather in Africa hurting the cocoa crop and figured he could make money on cocoa futures. Didn’t work. The moral of the story was that bad weather or no, the price of cocoa was whatever Hershey and Nestle said it was.

yes, there are chocolate snobs

Tell me. I’m starting to regard Lindt as “moderately acceptable” starter chocolate nowadays :D.


Chocolate bar price-fixing case against Mars dropped by prosecutors

File photo of the Nestle logo is pictured on KitKat chocolate bars at the company headquarters in Vevey October 17, 2013.

This article was published more than 5 years ago. Some information in it may no longer be current.

Eight years after an investigation began, a sprawling, delay-plagued criminal case targeting an alleged price-fixing conspiracy among the top players in Canada's chocolate-bar business appears to be melting away.

The Competition Bureau announced on Thursday that Crown prosecutors had stayed price-fixing charges laid in 2013 against Mars Canada Inc., wholesale distributor ITWAL Ltd., former Nestlé Canada confectionery president Sandra Martinez and ITWAL president and CEO David Glenn Stevens.

The federal watchdog said that criminal charges against Nestlé Canada and its former chief executive officer, Robert (Bob) Leonidas, remained.

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But Symon Zucker, a lawyer for Ms. Martinez, said Crown prosecutors told a Toronto courtroom on Tuesday that they would take the next two months to evaluate whether to proceed against the remaining two defendants.

The Public Prosecution Service of Canada would not say why the charges were abandoned, which is not unusual. But Mr. Zucker said prosecutors told him it was because the Crown did not see any reasonable chance of a conviction against his client.

He said Ms. Martinez was pleased with the stay: "I've got a relieved and happy client who feels vindicated."

Allegations that Nestlé – the maker of chocolate bars such as Kit Kat, Coffee Crisp and Big Turk – colluded with its major competitors in Canada to co-ordinate price increases ranging from 4 per cent to 8 per cent were first revealed in 2007, after Competition Bureau investigators raided the Canadian offices of Nestlé, Hershey, Mars and ITWAL.

The collapse of the case is even more surprising, considering that the 2007 raid came after competitor Cadbury Adams Canada Inc. went to the bureau with the allegations and was granted immunity from prosecution.

Plus, just after the charges were laid in June, 2013, Hershey Canada Inc. pleaded guilty to one charge and agreed to a $4-million fine for its role, having been granted leniency for its co-operation with the investigation.

In court filings, the bureau alleged that chocolate executives met in restaurants and at conventions to discuss price increases on both regular and seasonal products such as those aimed at Halloween and Easter.


Canada abandons chocolate price-fixing investigation

Ottawa (AFP) - Canadian authorities have dropped a price-fixing probe of Nestle Canada and its former president Robert Leonidas, AFP learned Thursday.

The Canadian arm of the Swiss chocolate maker had been accused of conspiring with US candy-makers Mars and Hershey to fix chocolate prices in Canada between 2002 and 2008.

In a statement, the Competition Bureau said it "entered a stay of proceedings" against the accused on Tuesday.

The move comes after it dropped charges two months ago against Mars, another former Nestle executive and ITWAL Ltd., a network of independent wholesale candy distributors.

Hershey pleaded guilty in 2013 to price-fixing and was fined Can$4 million. The company is the only target of the far-reaching probe to be convicted in the case.

The investigation was started in 2007 after whistleblower Cadbury informed authorities that the three rivals and ITWAL had been colluding on the pricing of chocolate candy sold across Canada since 2002.

The scheme included popular brands such as Kit Kat, Coffee Crisp, Aero, Twix, Snickers, Bounty and M&Ms.

The Competition Bureau said it now considers the investigation closed.

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Also charged Thursday were former Nestlé Canada president Robert Leonidas, former Nestlé Canada president of confectionery Sandra Martinez, and ITWAL’s president and CEO David Glenn Stevens.

Court documents unsealed in December 2007 alleged that senior executives at Hershey, Nestlé and Mars held clandestine price-fixing meetings in locations such as coffee shops, restaurants and industry conventions. The alleged conspiracy reportedly dates back as far as 2002.

Canadian consumers — who buy billions of dollars worth of chocolate each year — may never have gotten a whiff of the case if it wasn’t for a whistle-blower within the industry.

The competition bureau learned of the alleged cartel through its Immunity Program, which offers insiders who tell the regulator about an offence immunity or leniency if they co-operate with the investigation.

Hershey Canada Inc. co-operated with the probe, and the bureau said Thursday it recommended to the prosecution that it go easy on the chocolate titan.

Hershey Canada said Thursday it reached a settlement with the competition bureau, and it will plead guilty on June 21 to one count of price fixing, related to communications with its Canadian competitors in 2007.

“Hershey Canada promptly reported the conduct to the competition bureau, co-operated fully with its investigation and did not implement the planned price increase that was the subject of the 2007 communications,” the chocolate maker said in a statement.


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