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Nestlé, Mars charged with price-fixing in Canada

June 11, 2013
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Photo credit: Palle Christensen/iStockphoto/Thinkstock

Canadian authorities have charged two of the biggest chocolate producers, Nestlé and Mars, with conspiring over price-fixing with other companies, including Hershey, the Competition Bureau announced last week.

Both Nestlé and Mars have denied the charges. However, according to the Competition Bureau, Hershey Canada intends to plead guilty to taking part in a "conspiracy to fix the price of chocolate confectionery products in Canada." The bureau recommended that prosecutors treat Hershey leniently because of its cooperation with authorities during the investigation.

The Competition Bureau claimed it had discovered evidence that the accused "conspired, agreed or arranged to fix prices of chocolate products, resulting in a referral of evidence to the Public Prosecution Service of Canada (PPSC) and charges against the accused." John Pecman, Canada's interim commissioner of competition, stated that regulators were committed to expose those who had engaged in anti-competitive behavior and had plotted to take advantage of Canadian consumers.

National independent wholesale distributors network ITWAL Ltd. has also been charged, along with the organization's president and chief executive David Glenn Stevens. Also among the people investigated there are ex-Nestlé Canada president Robert Leonidas and former president of confectionery for Nestlé Canada Sandra Martinez. If found guilty, the accused could be fined up to CA$10 million and could face a prison sentence of up to five years.

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However, proving them guilty may be very difficult as Canadian law not only requires that an agreement between competitors to fix prices is proved, but the bureau will also have to prove that the agreement could have an adverse effect on the market, which is a challenge for investigators and prosecutors, the agency explained.

The Competition Bureau said that the scheme was exposed through a program that might protect from prosecution the party that disclosed the wrongdoings first. Other cooperating parties could also be treated more leniently than those that refuse to cooperate and are subsequently found guilty. These are important incentives that encourage Canadian businesses to report illegal activities and to work as partners with the Competition Bureau, the statement said.

Nestlé Canada published a short statement on its website, claiming that it would "vigorously defend" itself and that the company took pride in the fact that it operated "with the highest ethical business standards." Similarly, Mars also stated that it would defend its reputation but added that it would not comment further while litigation is pending.

In another statement, Hershey Canada said that it had reported the conduct to the Competition Bureau and cooperated fully with its investigation. Hershey claimed that the company did not implement the proposed price increase that was planned in 2007. The company expressed regret for its actions and placed the responsibility on now-departed employees.

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