Antitrust Law Daily Wrap Up, ANTITRUST—M.D. Pa.: Chocolate candy makers, charged with price fixing, receive Valentine Act present, (Aug 20, 2014)

By John W. Arden, J.D., LL.M.

Manufacturers of chocolate confectionary products, which were previously granted summary judgment in class action price fixing charges under Section 1 of the Sherman Act, were entitled to summary judgment on price fixing charges brought under the Ohio Valentine Act, according to the federal district court in Harrisburg, Pennsylvania (In re Chocolate Confectionary Antitrust Litigation, August 19, 2014, Connor, C.).

Retail grocers, convenience stores, and distributors purchasing directly from Nestle, U.S.A., The Hershey Co., and Mars, Inc. had alleged that the candy makers conspired to fix prices in violation of Section 1 of the Sherman Act and the Ohio Valentine Act. Specifically, the plaintiffs claimed that the candy companies were in possession of one another’s pricing information and conspired to raise the prices of their chocolate products.

In a February 26, 2014 decision, the federal district court entered summary judgment on the Sherman Act claims, finding that the plaintiffs failed to produce sufficient evidence of a price fixing agreement. To establish a conspiracy in restraint of trade, a plaintiff must show “some unity of purpose, common design and understanding, or a meeting of the minds in an unlawful arrangement.” The companies contended that the price increases were motivated by business judgment, were based on manufacturing and distribution costs, and were exercised with independent business judgment.

The court originally found that the plaintiffs produced sufficient evidence that the price increases were made with awareness of competitors’ pricing decisions and were influenced by those pricing decisions. It was undisputed that the increases were synchronized and parallel throughout the alleged conspiracy period. However, evidence of conscious parallel pricing is insufficient to infer the existence of a conspiracy, the court noted.

In this case, there was insufficient “plus factor” evidence to show that the alleged wrongful conduct was conscious and not the result of independent business decisions of the competitors, the court held. There was no evidence that the companies acted contrary to their business interests or any non-economic evidence implying the existence of a traditional conspiracy, according to the court. Based on these factors, the court held that the companies’ conduct was “as consistent with permissible competition as with illegal conspiracy” and entered summary judgment on the federal antitrust claims.

Subsequently, plaintiff Giant Eagle moved for an indicative ruling to correct an omission in the court’s February 26, 2014 order. It claimed that the court inadvertently entered judgment solely on the Sherman Act claims, but did not dispose of Giant Eagle’s claim under the Ohio Valentine Act. Agreeing with the parties that its “resolution of the state law claims would have mirrored its Section 1 analysis and disposition,” the court amended its order to enter summary judgment against Giant Eagle on its Ohio Valentine Act claims.

The case is No. 1:08-MDL-1935.

Attorneys: Bernard D. Marcus (Marcus & Shapira LLP) for Giant Eagle, Inc. Alan R. Boynton, Jr. (McNees, Wallace & Nurick) for The Hershey Co.

Companies: Giant Eagle, Inc.; The Hershey Co.

Cases: Antitrust PennsylvaniaNews