Hershey Canada pleads guilty to chocolate price fixing, fined $4 million

TORONTO – Hershey Canada Inc. will pay a $4-million fine after pleading guilty to working with other companies to fix the price of chocolate products.

The Competition Bureau said the Mississauga, Ont.-based company admitted in the Ontario Superior Court of Justice that it conspired, agreed or arranged to fix the price of chocolate confectionery products in Canada in 2007.

The company has also agreed to co-operate with federal prosecutors in return for lenient treatment from the Competition Bureau.

The agency laid charges earlier this month against three other companies and three high-ranking individuals within the businesses.

Also charged by the Competition Bureau are Nestle Canada and two of its former executives, Mars Canada, and national wholesale network ITWAL Ltd. as well as ITWAL’s chief executive officer.

Hershey had previously agreed to make the guilty plea and co-operate with the Competition Bureau’s investigation into the alleged conspiracy.

The Competition Bureau has a leniency program for the first party to disclose an offence that hasn’t been detected, provided it co-operates fully with the agency’s investigation and later prosecution.

“Price-fixing is a serious criminal offence, regardless of whether it is in the chocolate confectionery market or any other industry,” John Pecman, Commissioner of Competition, said in a statement Friday.

“The collaboration of organizations or individuals is one of our best weapons to bring to light illegal agreements between competitors, which are secretive in nature and very difficult to detect.”

The Competition Bureau earlier this month filed criminal charges against Nestle SA’s Canada arm, Mars Inc.’s Canada division and ITWAL Ltd., a network of independent wholesale distributors. Also charged are former Nestle Canada Inc. president Robert Leonidas; Sandra Martinez, former president of confectionery for Nestle Canada; and David Glenn Stevens, president and chief executive of ITWAL.

Nestle, Mars and Itwal Ltd. have said they intend to defend themselves against the charges. A trial date is set for Oct. 3.

Under the Competition Act, it is a criminal offence for two or more competitors or potential competitors to conspire, agree or arrange to fix prices, allocate customers or markets, or restrict the output of a product.

If convicted, the defendants could face a fine of up to $10 million and a prison term of up to five years.

Under newer provisions of the act, however, a conviction could result in a fine of up to $25 million or a prison term of up to 14 years, or both.

Chocolate maker Cadbury Adams Canada first brought the matter to the bureau’s attention in 2007 and received immunity from prosecution.

Hershey Canada reported communications with competitors related to the price fixing from 2007. The company said neither its current senior management, nor the leaders of parent company Hershey Co., were involved in fixing prices.

– with files from The Associated Press