Conspiracy in the Chocolate Industry? Say it Isn’t So!

Hershey Canada pled guilty to fixing the price of chocolate confectionery products in Canada in 2007. Cadbury Canada had been first in, contacting the Bureau in 2007 and availing itself of the Competition Bureau’s Immunity Program to avoid prosecution. Hershey, as second in line, was fined $4 million, but also avoided prosecution.

On June 6, 2013, charges were laid against Nestlé Canada Inc.; Mars Canada Inc.; ITWAL Limited, a national network of independent wholesale distributors; 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. Since then, the case has been tangled in a procedural fight over documents given to the Bureau by Hershey and Cadbury (now Kraft Canada Inc.) before they were formally granted immunity under the program.

In a January 2015 hearing in the Ontario Supreme Court of Justice, Hershey and Cadbury claimed that the information relates to confidential discussions about settlement and leniency, so should be protected by “settlement privilege.” They also argued that, if the documents were released, it would discourage other organizations from voluntarily reporting anti-competitive behaviour.

However, some of the documents had already inadvertently been released to the defendants, and had been used to obtain search warrants. The defendants argued that they are entitled to see the documents in order to defend the case against them, and the Court agreed, dismissing the notion that it would discourage other organizations from using the Leniency Program.

With the release of those documents, the case against Nestlé, Mars, ITWAL, Leonidas, Martinez and Stevens can now move ahead. Stay tuned to The Legal Edge for updates on this important case of alleged criminal conspiracy among these chocolatiers and distributors.

Editor’s Note:
On November 17, 2015 the Public Prosecution Service of Canada entered a stay of proceedings, bringing the chocolate price-fixing case to a close

Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case.  For any particular legal problem, seek advice directly from your lawyer or in-house counsel.  All dates, contact information and website addresses were current at the time of original publication.