Thursday, February 07, 2008

Nestle accused of price fixing yet again (not the same story as on Tuesday!)

For the second time this week I am writing about Nestlé being accused of price fixing. On Tuesday it was about the price of milk, where Nestlé is denying charges in South Africa. Today it is over chocolate, where Nestlé is denying charges in Canada.

There is an article about this in the New York Times on 3rd February. The big fish accused alongside Nestlé are Hershey and Mars.

The case is in court and Nestlé is, of course, innocent until proven guilty.

The alleged cartel came to light when one of the companies involved went to the authorities. Under Canadian law, the first company to blow the whistle gains immunity from prosecution. This is from the New York Times:

---quotes begin
The business [that blew the whistle] provided testimony from one of its top executives and tales from many other employees, as well as e-mails, phone records and receipts to corroborate their stories. In November, Canadian authorities searched the local offices of Hershey, Mars, Nestle and ITWAL, a food distributor based in Ontario.

"The means used to enhance prices was by way of a deliberate, secretive and high-level price-fixing agreement," bureau attorney Daniel Wilcock wrote in a court affidavit filed to support the search warrants. "In the case of at least the cooperating party, Hershey and Nestle, the alleged conspiracy was brought about and sanctioned at the highest levels of the companies involved."


"When this thing goes up to the top [of a company], it really says something about the culture," said White, the NYU professor.


"It's always, 'What could they have been thinking?'" said Andy Gavil, a law professor at Howard University who teaches antitrust law. "And the answer always is a lot of money."
---quotes end

The investigation has now spread to the US and consumers and smaller competitors have filed class actions.

As I mentioned on Tuesday Nestlé was amongst 7 companies fined for price-fixing formula in Italy in 2005. Baby Milk Action campaigns against the inflated price of formula, which is already one of the most profitable products on the supermarket shelves. With the poorest mothers statistically less likely to breastfeed in most industrialised countries, this profiteering is particularly cynical.

The lack of respect for competition regulations in Italy comes as little surprise to those used to seeing Nestlé flouting the marketing standards for baby foods. Nestlé's comments in the chocolate case also have a familiar ring to them.

According to the New York Times: "Swiss chocolatier Nestle said it will cooperate if asked. 'It is our policy to operate ethically and follow all applicable laws and regulations wherever we do business,' spokeswoman Laurie MacDonald said."

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