Bitter sweet settlement for chocolate makers

Published On 26/09/2013 | By Kim de Kock | Cartels, Enforcement

In our previous post, we blogged about the investigation and criminal charges brought by the Canadian Competition Bureau (Bureau) against various chocolate manufacturers and a chocolate distributor in Canada for conspiring to fix the price of chocolate in Canada at a premium.

In addition to the investigation and the criminal charges brought against the companies and certain employees, a class action law-suit was also launched in 2008 against the manufacturers, Mars Canada Inc. (Mars), Cadbury Adams Canada Inc. (Cadbury Adams), Hershey Canada Inc. (Hershey) and Nestlé Canada Inc. (Nestlé), as well as the distributor ITWAL Ltd.  The class action alleged that, as a result of the cartel, Canadian consumers had to pay artificially inflated prices during the relevant period for chocolate products including Aero, Crispy Crunch, Dairy Milk, Mars, Smarties and Twix.

Mars and Nestlé recently agreed to settle the class action, on a ‘no admission of fault’ basis, and agreed to pay C$3.2 million (approximately A$3.3 million) and C$9 million (approximately A$9.3 million), respectively.  This brings the aggregate settlement amount to C$23.2 million (approximately A$24 million) taking into account settlement agreements that Cadbury and Hershey reached earlier in the year.  A large portion of the aggregate settlement amount will be made available to consumers who are able to satisfy certain criteria and subject to an agreed distribution methodology.

Despite settling the class action matter, the Bureau continues to pursue the criminal cases against Mars, ITWAL and Nestlé, as well as certain employees, which is set for trial on 3 October.  As reported in our previous post, Hershey admitted its role in the cartel in June this year and was fined C$4 million by the Supreme Court of Justice in Toronto.

We will keep you updated on further developments, following the outcome of the trial in October.

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About The Author

is a Senior Associate in the Sydney office of King & Wood Mallesons where she specialises in anti-trust law, with a focus on mergers and acquisitions, access matters as well as general competition issues. Outside of the office, Kim has recently taken up surfing... but is probably not going to be appearing on the ASP tour any time soon.

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