Two of the world's biggest chocolate companies, Nestlé and Mars, have been charged in Canada with price-fixing.
The charges come after a five-year investigation by the Competition Bureau in Canada and follows a class action in which the confectionary companies agreed to pay compensation.
In a statement it announced: “The Bureau's investigation uncovered evidence suggesting that the accused conspired, agreed or arranged to fix prices of chocolate products, resulting in a referral of evidence to the Public Prosecution Service of Canada (PPSC) and charges against the accused.”
John Pecman, the Bureau's Interim Commissioner, said he was determined to stamp out “egregious anti-competitive behaviour”. He added: “Price-fixing is a serious criminal offence and today's charges demonstrate the Competition Bureau's resolve to stop cartel activity in Canada.”
The Canadian arms of Mars and Nestlé, along with the Canadian branch of Hershey and the distributor ITWAL, are alleged to have colluded to keep the price of chocolate confectionary artificially high.
ITWAL was charged along with Mars and Nestlé but the Competition Bureau has recommended leniency against Hershey because it co-operated with the inquiry.
Three senior executives were charged individually. They are 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.
Each of them faces a maximum jail sentence of five years and could be fined up to $10 million. Had the alleged offences been committed after new laws were introduced they would have faced fines of up to $25m and 14-year prison terms.
Nestlé said in a statement: “Nestlé Canada will vigorously defend these charges. At Nestlé Canada, we pride ourselves on operating with the highest ethical business standards.” Mars issued a similar promise to fight the allegations.
Hershey released a statement expressing regret for its actions and laying the responsibility at the feet of now-departed employees.