Mars and Nestlé win evidence battle in chocolate price collusion case

Two confectionery giants have won access to Hershey and Cadbury’s leniency filings in a criminal case in Canada that accuses them of colluding to fix chocolate prices.

Mars Canada and Nestlé Canada hope access to the documents will help build up a stronger defence as they continue to fight criminal charges brought against them in June 2013.

The ongoing case started when Cadbury, now owned by Mondelēz, tipped off Canada’s Competition Bureau in 2007 that it had colluded with Nestlé, Mars, Hershey and a retail distributor to artificially raise chocolate prices in Canada. Cadbury was given immunity from prosecution as the initial whistleblower. Hershey last year pleaded guilty of price fixing and was given a lenient $4m fine after it disclosed information to the Bureau.

Mars and Nestlé were both criminally charged, along with retail distributor ITWAL Limited. Ex-Nestlé Canada president Robert Leonidas, Nestlé Canada’s former president of Confectionery Sandra Martinez and David Glenn Steven, president and CEO of ITWAL, were also charged at the time.  

Disclosure docs not privileged info

Nestlé and Mars had been unable to inspect Cadbury and Mars’ leniency filings under a settlement privilege. But Ontario’s Superior Court of Justice ruled last month that 'factual information' handed to prosecutors could be viewed by Mars and Hershey and was not subject to settlement privilege.

The information disclosed by Cadbury includes interviews and statements allegedly made by Leonidas and Martinez. Hershey’s leniency filing includes interviews with Hershey employees that purportedly implicate Hershey and the accused companies of price fixing.

‘Chocolate cartel’ background

In 2013, Mars and Nestlé settled a separate class action civil lawsuit brought by private consumers. Mars agreed to pay C$3.2m (US $2.5m) and Nestlé C$9m (US $7.1m), but both denied wrongdoing. Hershey Canada and Cadbury had previously settled the lawsuit for C$5.3m (US $4.2m) and C$5.7m (US $4.5m) respectively.

The four chocolate giants were also accused of price fixing in the US in a class action lawsuit in Pennsylvania that alleged the confectionery firms could not have achieved parallel price increases in Canada without agreeing to fix prices together in the US. That case was dismissed, but the claimants which include retailers such as Kroger and Safeway, have appealed.

In 2013, eleven chocolate companies, including Nestlé, Kraft (now Mondelēz), were fined over €60m ($82m) for colluding to raise chocolate prices in Germany. Mars escaped penalty as one of the whistleblowers.