Charges laid in a price-fixing cartel in the chocolate industry

OTTAWA, June 6, 2013 — The Competition Bureau announced today that criminal charges have been laid against three companies and three individuals accused of conspiracy under the Competition Act for their role in fixing the price of chocolate confectionery products in Canada.

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.

"We are fully committed to pursuing those who engage in egregious anti‑competitive behaviour that harms Canadian consumers," said John Pecman, 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."

The three companies charged are Nestlé Canada Inc. (Nestlé); Mars Canada Inc. (Mars); and ITWAL Limited (ITWAL), a national network of independent wholesale distributors.

The three individuals charged 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.

The Bureau became aware of the conduct through its Immunity Program. Under the Immunity Program, 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 PPSC may receive immunity from the PPSC, provided that it fully cooperates with the Bureau and the PPSC. Subsequent cooperating parties may receive lenient treatment under the Bureau's Leniency Program. These programs provide powerful incentives for business organizations and individuals to come forward and cooperate with the Bureau's investigations.

As Hershey Canada Inc. (Hershey) cooperated with the Bureau's investigation, the Bureau recommended to the PPSC that Hershey receive lenient treatment. It is expected that Hershey will plead guilty on June 21, 2013, for its role in the conspiracy to fix the price of chocolate confectionery products in Canada.

Under the current conspiracy provision in the Competition Act, it is a criminal offence for two or more competitors or potential competitors to conspire, agree or arrange to fix prices, allocate customers or restrict the output of a product. An offence under this provision is punishable by a fine of $25 million and/or imprisonment for a term of up to 14 years. 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.

To secure a conviction under the former conspiracy provision of the Act, the Bureau is required not only to prove an agreement between competitors to fix prices, but also that the agreement was likely to have an undue economic effect on the market. This significantly increases the complexity of proving a violation of the Act.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

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