Confectionery cartel? Charges laid in chocolate price-fixing case - Macleans.ca
 

Confectionery cartel? Charges laid in chocolate price-fixing case


 

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.

In this case, the bureau says Hershey Canada co-operated with its investigation and the agency recommended to prosecutors that the company receive lenient treatment.

The bureau says it must not only prove competitors agreed to fix prices, but that the agreement would likely have “an undue economic effect” on the market.

“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 came into effect in 2010, the accused in this case face a fine of up to $10 million and/or a prison term of up to five years.

The bureau says proving the law was broken will also be more complicated under the old rules.


 
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