The Globe and Mail (Toronto) describes affidavits that Canadian antitrust enforcers used to get chocolate search warrants last month.  The Competition Bureau filed the 24-page and 57-page affidavits with the Ottawa Superior Court of Justice.  The WSJ has a similar article.

The affidavits tell of a price-fixing conspiracy lasting from 2002 until a few weeks ago.  The scheme involved the big chocolatiers — Hershey, Cadbury Schweppes, Mars, and Nestle — as well as ITWAL, which describes itself as a "national distribution network of wholesale distributor members."  The conspirators agreed to coordinate price increases and may even have forced retailers not to discount.

The reports don’t name the affiants other than to say that they want immunity.  Here’s a clue:  The Competition Bureau didn’t ask for a Cadbury Schweppes search warrant.  Hmmm.

Blawgletter read about the Canadian probe last month and learned yesterday that our Antitrust Division now has its own inquiry going.

To get a flavor for how the chocolate bidness operates in the U.S., we took a look at a few reports.  We found an April 4, 2007, press release in which Hershey announced "[a]n increase of approximately 4-5 percent on the Company’s standard bar, king-size bar, 6-pack and vending lines . . . effective immediately."  We also saw this April 5, 2007, report:  "Prudential analyst John M. McMillin . . . noted that . . . British competitor Cadbury recently raised prices and privately held competitor Masterfoods, which makes M&Ms and Mars candy bars like Snickers and 3 Musketeers, ‘is also taking pricing up, so Hershey is not out there alone, we think, in this chocolate price increase.’"  And, on April 23, 2007, Nestle mentioned the positive impact in the Americas of customer "buying ahead of price increases, notably in dairy-related categories."

Coincidence doesn’t prove coordination of course.  But what do they say about smoke and fire?

Barry Barnett

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