NEWARK (CN) – Hershey, Mars, Nestle and Cadbury run a worldwide chocolate cartel that fixes and inflates the price of chocolate, a class-action antitrust suit claims in Federal Court. The alleged conspirators control more than 80 percent of the $16 billion U.S. chocolate market, and half of the world market, and raised prices in concert this year, claim lead plaintiffs CNS Confectionery Products and Winn Corp.
Much of the revenue increase in the $16 billion U.S. chocolate market in 2006 “was achieved through price increases rather than increased unit sales,” the complaint states. It claims the defendants “institute(ed) uniform price increases in 2007.”
The Ontario Superior Court in Canada issued search warrants on Nov. 21 “to investigate a scheme to fix the prices of chocolate among Hershey’s, Mars, Nestle, and Cadbury,” the complaint states. (A similar class-action complaint has been filed in Vancouver, B.C., Supreme Court.)
The U.S. Justice Department allegedly opened its own antitrust investigation on Dec. 20.
Hershey’s controls 45 percent of the U.S. chocolate market, and earned $306 million on $4.9 billion in revenue in 2006, the complaint states. It adds, “Hershey’s directly or through its subsidiaries or affiliates, manufactured and sold chocolate to customers at anticompetitive prices which were inflated by reason of Defendants’ unlawful conduct.” This accusation is repeated for all the defendants.
Mars, a privately held family corporation, controls 27 percent of the U.S. chocolate market, and had $21 billion in revenue in 2006.
Masterfoods, a division of Mars, had sales of more than $5 billion in 2006.
Nestle reported net income of $4.5 billion on gross revenue of $87 billion in 2006, and controls 9 percent of the U.S. chocolate market.
Cadbury Schweppes reported net income of $2 billion on gross revenue of $15 billion in 2006.
Globally, Mars controls 15 percent of the chocolate market, Nestle 13 percent, and Hershey’s and Cadbury 8 percent each, the complaint states.
The defendants employ more than 400,000 people.