Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Hershey Canada pleads guilty to Competition Bureau chocolate price fixing charges, fined $4 million, (Jun 21, 2013)

By Tobias J. Gillett, J.D., LL.M.

Hershey Canada Inc. pled guilty today to Canadian Competition Bureau charges that it participated in a conspiracy to fix the prices of chocolate confectionery products, the Competition Bureau has announced. The Ontario Superior Court of Justice in Toronto fined Hershey Canada $4 million for its conduct.

According to the Bureau, Hershey Canada admitted that it “conspired, agreed or arranged to fix the price of chocolate confectionery products in Canada in 2007,” and that its senior employees “communicated with other members of the alleged cartel to exchange competitively sensitive pricing information about chocolate confectionery products in Canada.”

"Price-fixing is a serious criminal offence, regardless of whether it is in the chocolate confectionery market or any other industry," said John Pecman, the Competition Bureau’s Commissioner of Competition. "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."

On June 6, 2013, the Competition Bureau announced that it had brought price fixing charges against major chocolate manufacturers and distributors, including Nestlé Canada Inc., Mars Canada Inc., and ITWAL Limited, and three of their executives, and that Hershey Canada was expected to plead guilty at a later date.

The Bureau learned of the alleged conspiracy through its immunity program, which grants immunity to the first party reporting an offense that had not yet been detected or providing information that leads to a referral to the Public Prosecution Service of Canada (PPSC). In the present case, Bureau recommended to the PPSC that Hershey Canada should receive lenient treatment under its leniency program, which grants leniency to subsequent parties that cooperate with the investigation.

The Competition Act treats as criminal offenses conspiring, agreeing, or arranging to fix prices, allocate customers or markets, or restrict the output of a product. The current conspiracy provision provides for a fine of up to $25 million and/or imprisonment for up to 14 years. However, the present case occurred under the former conspiracy provision, which provided for a fine of up to $10 million and/or imprisonment for up to five years.

Companies: Hershey Canada Inc.; Nestlé Canada Inc.; Mars Canada Inc.; ITWAL Limited

News: Antitrust