NESTLÉ, MARS EMBROILED IN CHOCOLATE CONSPIRACY CHARGES

Published June 10, 2013 in Food Product Design

OTTAWA—Nestlé and Mars have been accused of conspiring to fix the prices of chocolate confectionary products in Canada in violation of a law that could land certain individuals in prison and/or result in millions of dollars in fines.

Canada's Competition Bureau (Bureau), an independent law enforcement bureau, recently announcedcriminal charges have been brought against Nestlé Canada, Inc., Mars Canada, Inc., and ITWAL Limited (ITWAL), a national network of independent wholesale distributors.

The charges alleging violations of Canada's Competition Act relate to activity dating back to 2007 and previous years.  

Hershey Canada, Inc., cooperated with the probe, and the Bureau said it is recommending that the Public Prosecution Service of Canada treat the chocolate company leniently. Hershey is expected to plead guilty on June 21 for its role in the price-fixing conspiracy, according to the agency.

In a statement June 6, Hershey revealed it will plead guilty to one count of price fixing and related to communications with rivals in 2007.

"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," Hershey said.

The Bureau said it learned of the alleged criminal behavior through a program that grants immunity to parties that come forward with certain evidence or disclose an offense that it not known.

Other defendants in the criminal case include Robert Leonidas, former President of Nestlé Canada; Sandra Martinez, former President of Confectionery for Nestlé Canada; and David Glenn Stevens, President and CEO of ITWAL.

Ross Robertson, President and CEO of ITWAL Limited, said the company and Stevens "strongly deny the Bureau's allegations and intend to vigorously defend the charges."

"ITWAL Limited has always carried on its business for the benefit of its member distributors in full compliance with all Canadian laws," he said in an email.

Nestlé Canada and Mars Canada also said they plan to "vigorously defend" themselves.

"At Nestlé Canada, we pride ourselves on operating with the highest ethical business standards," Nestlé Canada said in a statement.

Mars Canada declined further comment, citing its policy of not commenting on pending litigation.

Because the alleged conduct occurred under Canada's former conspiracy provision, the possible penalties are not as severe as the penalties under the current law. Still, if the defendants are convicted, they face up to $10 million in fines and/or imprisonment for as long as five years.

"To secure a conviction under the former conspiracy provision of the Act, the Bureau is required not only to prove an agreement between competitors to fix prices, but also that the agreement was likely to have an undue economic effect on the market," the Bureau explained. "This significantly increases the complexity of proving a violation of the Act."

A spokesperson for the Competition Bureau said the agency could not share the court documents but he noted the papers related to the charges are available for public review at the Superior Court of Justice in Toronto.

Check out my latest e-book entitled: "Social Media Marketing in Agri-Foods: Endless Profit and Painless Gain".  

The book is available on Amazon and Kindle for $4.99 USD. Visit amazon/Kindle to order now:
http://www.amazon.ca/Social-Media-Marketing-Agri-Foods-ebook/dp/B00C42OB3E/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1364756966&sr=1-1

Written by Bruce MacDonald, a 30 year veteran of the Agri-food industry, in "Social Media Marketing in Agri-Foods: Endless Profit and Painless Gain", Bruce applies his background and expertise in Agri-foods and social media to the latest trends, tools and methodologies needed to craft a successful on-line campaign. While the book focuses on the Agri-food market specifically, I believe that many of the points Bruce makes are equally applicable to most other industries.