Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Major Manufacturers Accused of Fixing Prices of Canadian Chocolate, (Jun 6, 2013)

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

Canada’s Competition Bureau (CCB) has charged three confectionery manufacturers and three of their executives with participating in a conspiracy to fix the price of chocolate confectionery products in Canada, the agency announced today.

The charges name Nestlé Canada Inc., Mars Canada Inc., and ITWAL Limited, a national network of independent wholesale distributors, as well as 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. A fourth manufacturer, Hershey Canada Inc., is expected to plead guilty on June 21, 2013, to charges related to its role in the alleged conspiracy, but the CCB will recommend that it should receive lenient treatment due to its cooperation with the investigation under the CCB’s leniency program.

The CCB acquired evidence of the alleged conspiracy through the leniency program, which allows for a grant of immunity to the first party to disclose to the Bureau an offence not yet detected or to provide evidence leading to a referral of evidence to the Public Prosecution Service of Canada (PPSC), and allows for leniency to subsequent cooperating parties. The evidence the CCB uncovered indicated that the accused manufacturers and individuals conspired, agreed, or arranged to fix prices of chocolate products, resulting in a referral of evidence to the PPSC.

"We are fully committed to pursuing those who engage in egregious anti-competitive behaviour that harms Canadian consumers," said John Pecman, the CCB’s Interim Commissioner of Competition. "Price-fixing is a serious criminal offence and today's charges demonstrate the Competition Bureau's resolve to stop cartel activity in Canada."

Under the current Competition Act, competitors or potential competitors who conspire, agree or arrange to fix prices, allocate customers, or restrict the output of a product may be punished by a fine of $25 million and/or imprisonment for a term of up to 14 years. However, in this case, the conduct occurred under the former conspiracy provision and the accused face the possibility of a fine of up to $10 million and/or imprisonment for a term of up to five years.

Nestlé response. Nestlé Canada issued a brief press release denying the charges and promising to mount a defense against them.

“Nestlé Canada will vigorously defend these charges,” the press release stated. “At Nestlé Canada, we pride ourselves on operating with the highest ethical business standards.”

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

News: Antitrust