Legal News

No Hugs or Kisses: Chocolate Makers Face Price-Fixing Suits

By Dan Slater

The Law Blog has developed somewhat of a yen for chocolate recently. It all started with a New Yorker article we read last year. The piece profiled Frederick Schilling, who, after launching chocolate maker Dagoba, became obsessed with travelling to far-flung regions in pursuit of the perfect cacao tree. The Law Blog now checks our bars to make sure they contain at least 70% cacao.

The Schilling profile ended with him selling his organic chocolate company to Hershey for $17 million, reflecting a movement by consumers — Law Blog included — toward higher-end, organic chocolate consumption. (In our opinion, it really does taste better.) Now, consumers and retailers are alleging that the move to upscale chocolates, combined with increasing health concerns, has hurt some of the old standby confectioners, like Hershey. In response, they allege, Hershey and others have turned to illegal price-fixing to help shore up business. Click here for the WSJ story.

About 50 civil suits have been filed against Hershey and other chocolate companies, many of them on behalf of consumers and resellers. The suits come on the heels of U.S. federal investigations into the pricing actions of these companies.

“The chocolate confectionery product market was ripe for collusion,” reads one lawsuit, filed last week by supermarket chain Giant Eagle in Pittsburgh district court. “In addition to the collective market power exercised by the defendants . . . defendants’ profits from these products have suffered in recent years because of increasing health concerns, and changing consumer preferences, with respect to chocolate consumption.” The defendants are Hershey, Mars, Nestlé, Cadbury Schweppes and Itwal, a Canadian network of distributors.

A Nestlé spokeswoman told the WSJ she hadn’t seen the lawsuits, but that the company plans “to cooperate fully with this investigation as we have from the get-go.”

Hershey said it didn’t make any agreements with competitors to set prices in the U.S. “None of the lawsuit complaints contain any facts or evidence to suggest otherwise,” said a Hershey spokesman. Spokeswomen for Mars and Cadbury declined to comment. Itwal didn’t return calls for comment.

Full post as published by Law Blog - WSJ.com on December 31, 1969 (boomark / email).