Sunday, October 9, 2011

Update on Chocolate Price Fixing Litigation

I recently received an inquiry about the status of the chocolate price-fixing litigation, In re Chocolate Confectionary Antitrust Litigation, No. 08-MDL-1935.

Background - In late 2007, it was revealed that the U.S. DOJ and Canadian authorities were investigating possible price-fixing by major chocolate manufacturers.  A number of class action lawsuits were filed shortly thereafter against Hershey, Mars, Nestle, and Cadbury for alleged antitrust overcharges.  Defendants allegedly engaged in a series of parallel price increases, and were involved in conspiratorial communications in Canada.  While the manufacturers blamed the price increases on a rise in commodity prices, one study found that chocolate prices rose 38% between 2004 and 2008, whereas commodity prices increased less than 16% during the same time period.   The class action lawsuits were consolidated in federal court in Pennsylvania.  In April 2009, the Court denied the defendants’ motions to dismiss the complaint, finding that the allegations of a conspiracy were plausible.

Update – After the Court’s denial of defendants’ motions to dismiss, the case has progressed slowly.  The parties have engaged in discovery, and plaintiffs filed a motion for class certification, which has not yet been decided.  Most significantly, plaintiffs recently entered into proposed settlements with Cadbury.  Under the terms of the proposed settlements, Cadbury will pay $1.3 million into a fund that will be used to pay expenses of the direct purchaser plaintiffs, $250,000 to be paid to indirect purchasers for resale, and $250,000 to be used to pay for class notice and administration.  In addition, Cadbury has agreed to provide certain cooperation in the prosecution of the litigation against the remaining defendants.  The settlement does not provide for any funds to be distributed to direct purchaser class members.

Class members have until October 21, 2011 to opt out of the settlement, and have until November 28, 2011 to object to the settlement.  The Court will hold a hearing on December 12, 2011 to determine whether to approve the settlement agreement.


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