Mars no longer faces price-fixing charges
Case against Nestlé Canada continues, alleging conspiracy to ease chocolate competition
Price-fixing charges against Mars Canada Inc., a national candy distributor, and two chocolate industry executives have been dropped, Canada’s competition watchdog announced Thursday.
The case against Nestlé Canada Inc. and its former president Robert Leonidas are continuing, the federal Competition Bureau also said in a brief statement.
The charges were dropped against distributor Itwal Ltd. and its president and chief executive officer David Glenn Stevens, and also against Sandra Martinez, former president of confectionary for Nestlé Canada, the bureau said. No explanation was offered. The case, which goes back eight years, involved allegations that Canada’s four largest chocolate makers conspired to fix prices and lessen competition in the multibilliondollar confectionary industry.
Criminal charges were laid in 2013 against Mars, Itwal, Nestlé, Hershey Canada and three industry executives following a five-year investigation by the Competition Bureau.
Hershey Canada Inc. pleaded guilty to one count of price-fixing related to communications with competitors in 2007 and was fined $4 million on June 22, 2013, in an Ontario Superior Court of Justice.
Cadbury Adams, which brought the matter to the bureau’s attention, received immunity from prosecution.
Mars, Nestlé, Itwal and the three named executives vowed to fight the allegations, which have not been proved in court.
The Competition Bureau alleged the accused had conspired, agreed or arranged to fix prices of chocolate products during a period from 2002 to 2008.
Court documents unsealed in December 2007 alleged that senior executives at Hershey, Mars and Nestlé met secretly in coffee shops and restaurants and at industry conventions to set prices, the competition bureau said. The documents alleged 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.
The maximum penalties under the act in force at the time the alleged conduct occurred were $10 million and/or five years in prison.
At Hershey’s sentencing hearing, court was told Hershey had entered into a conspiracy in the latter half of 2007 to lessen competition in the sale and supply of everyday chocolate. That supply included chocolate bars, according to a statement of admission and agreed-upon facts.
At the time, the four largest chocolate makers accounted for 75.3 per cent of chocolate sales in Canada, a market valued at $840 million, court heard. Nestlé was the market leader, court heard.
During the period, senior employees at Hershey and their counterparts at other chocolate companies exchanged competitively sensitive pricing information, either directly or through the distributor Itwal, court heard Friday.
On Nov. 22, 2007, this conduct led to an explicit agreement during a phone call between a senior manager at Hershey and senior officer at Nestlé, court heard. During the call, the Nestlé officer alluded to a previous conversation in which Nestlé had disclosed its pricing plans, court heard. In response, the senior manager at Hershey said Hershey planned to follow suit.
However, Hershey did not raise its prices in 2007, has expressed its remorse and fired the individuals involved, lawyer Martin Low, a partner at McMillan, told the court.
Class-action lawsuits filed against the firms resulted in settlements of more than $22 million. Nestlé 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.