Lawsuit Alleges Chocolate Companies Colluded to Rip Off Consumers
Siouxsie regrets to inform you that you have probably been ripped off by the chocolate industry. Even worse, you may have been the victim of collusion.
Easter normally is a great weekend to be in the chocolate business. But, Siouxsie bets that this year chocolate manufacturers aren’t thanking the Easter Bunny.
This is because a Minnesotan grocery chain Supervalu has sued Mars, Cadbury, Hersey, and Nestlé alleging that they orchestrated an an illegal and elaborate price-fixing scheme. A link to the complaint is here.
This lawsuit is just one of many against chocolate manufacturers alleging collusion. In the past year, the companies have been sued by major retailers, including Meijer Inc., Publix Super Markets Inc., CVS Pharmacy Inc. and Rite Aid Corp. [source]
Supervalu’s lawsuit, which was filed on Monday in federal court in Pennsylvania, claims that Mars, Cadbury, Hershey and Nestlé (“the Big Four”) worked together from 2002-2008 to manipulate prices. These companies, by the way, control more than 3/4 of the US chocolate market. The lawsuit maintains that the defendants conducted secret meetings, issued false pricing announcements, lied about circumstances affecting prices, and shared confidential pricing information.
Supervalu asserts that during the relevant time period consumer demand for chocolate had declined. And so, according to the complaint (and basic economics), prices should have fallen. Supervalu also believes that that the chocolate giants raised prices even though the market for most of the raw materials remained stable suring the relevant time frame.
Canada’s Competition Bureau has already investigated these allegations of collusion. And many of the facts in the complaint are based on this investigation. The U.S. has just started its own investigation of these claims.
Collusion is very difficult to prove. It will be years before all of these claims are sorted out. Until then, you might be well-advised to buy your chocolate from a local, independent shop.
Bonus Video: Tay Zonday — Chocolate Rain (It is too soon to know if Tay Zonday will be called as an expert witness by either side.)
Bonus Recipe: Chocolate Matzo
Source — Business Journal