Saturday, February 23, 2008

Investigation of Chocolate Price Fixing Goes Global

An investigation into price-fixing by chocolate manufacturers has been expanded to Europe.

I originally posted on the investigation after it was revealed that Canadian authorities were investigating chocolate pricing, and that the U.S. DOJ had followed suit. More recently, it was reported that Germany's Federal Cartel Office raided the offices of several chocolate makers. In addition, the European Commission has requested information on pricing practices of chocolate makers, as reported by the AP.

In its annual report, Hershey's states that it is the target of over 50 class action lawsuits in the U.S. and 3 in Canada. Hershey's reported that several other chocolate confectionaries are co-defendants. Hershey's further stated that:

"While it is not feasible to predict the final outcome of these proceedings, in
our opinion they should not have a material adverse effect on the financial
position, liquidity or results of operations of the Company. The Company is
cooperating with the government investigations and inquiries and intends to
defend the lawsuits vigorously."

In my earlier post, I noted the benefits companies may gain from cooperating with the DOJ in a price fixing investigation. For such cooperation to be effective, the company's lawyers must learn what impermissible acts occurred before the authorities do. In a global investigation of this type with countless documents and numerous decision-makers, that can be a difficult task, requiring swift and aggressive action by counsel. Ideally, the attorneys will learn that their company was not involved in any wrongdoing, but if they learn that the company was involved, they may be able to cooperate with DOJ and gain leniency.

Related Post: Chocolate Makers Allegedly Fixed Prices


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