Manufacturers

20+ retailers appeal antitrust call – while champs Nestlé, Hershey and Mars seek to recoup costs

21-May-2014
Last updated the 22-May-2014 at 10:23 GMT - By Annie-Rose Harrison-Dunn+
Over 20 retailers have lodged appeals against the dismissal of price-fixing allegations against Nestlé, Hershey and Mars.
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Retailers will appeal a recently lost price-fixing case against Nestlé, Hershey and Mars, while the triumphant chocolatiers have taken initial steps to recover court costs from the plaintiffs, according to US court documents.

Buyers accused the three confectionery giants of conspiring to raise chocolate prices in the US between the years 2002 and 2007 during discussions at trade shows and association events. In February, the district court in Pennsylvania ruled that the plaintiffs had failed to provide evidence that the firms’ actions were concerted and collusive, and as a result the $727m liable case initially bought in 2007 was dismissed. 

In light of this win, the chocolatiers have now placed an official request to the court to direct all bills of costs to the direct plaintiff groups in an attempt to retrieve charges they incurred. Meanwhile, over 20 pharmacies and food retail chains have lodged an appeal with the US Third Circuit against the Pennsylvanian summary judgement.

Lydia Méziani, senior corporate spokesperson for Nestlé, told ConfectioneryNews: "Nestlé is of course aware that plaintiff is appealing against the first instance decision that dismissed the class actions against us; we will continue to vigorously defend ourselves as we are firmly convinced that the facts and the law support our position." 

Appealing to the courts

Jeff Beckman, media spokesperson for Hershey, told us the company had expected the appeal but said it was pleased the court "recognized that there was no basis for a case and no misconduct" on its part.

"We have long held that the allegations in this case were without merit and the court confirmed that with its decision to dismiss the case without a trial," he said.  

In their defence, the chocolate firms said that any pricing increases were due to rising ingredient, manufacturing and distribution costs, and denied price fixing and hedging.

In the February ruling Chief Judge Conner said: “Nothing scandalous or improper has been discovered within our borders, and no evidence permits a reasonable inference of a price-fixing agreement.”

In six different notices of appeal to the US appeals court all filed May 16th, the following companies challenged the ruling: CVS Pharmacy, Longs Drug Stores California, Rite Aid Corporation, The Golub Corporation, Card & Party Mart, Jones Vend and OCS Distributing, PITCO Foods, The Lorain Novelty Company, Meijer, Publix Super Markets, SuperValu, Affiliated Foods, United Supermarkets, Giant Eagle, The Kroger Company, Safeway, Walgreen Company, Hy-Vee, Albertson’s LLC, The Great Atlantic, Pacific Tea Company, and the HEB Grocery Company.

The same day Nestlé, Hershey and Mars filed a joint memorandum in support of their bills of costs, claiming that as the prevailing party the court should order that the direct plaintiff groups are jointly and severally liable for their costs. They said that according to past appeal court rulings the burden was on the losing parties to introduce evidence and persuade the court that costs should be shared out.

Nestlé's spokeperson said it would have to wait until the case was closed to do this. "Nestlé is not recouping costs yet as we have won the first instance only for the time being; once the litigation is over we could be entitled to some limited recouping under US procedural laws."

In the joint memorandum the chocolate firms said: “Direct plaintiff groups also cannot deny that they were substantially involved in discovery.”  

"[They] issued more than 70 document requests that called for the production of millions of pages of documents [and] served deposition notices for more than 35 witnesses.”

A long story

The case stretches back to 2007, when Mondelēz International-owned Cadbury was amongst the initially accused, before settling for $1.3m in 2012.

In a separate case last year, Mars, Nestlé, Hershey Canada and Cadbury Adams settled over similar price-fixing allegations in Canada in 2007. Responding to the class action Mars agreed to pay C$3.2m and Nestlé C$9m in exchange for a full release of the alleged claims against them and their respected entities, including Mars Incorporated and Nestlé SA. While Hershey Canada  paid C$5.3m and Cadbury Adams C$5.7m. The firms denied wrongdoing. 

Related topics: Manufacturers, Mars, Nestlé, Mondeléz International, Hershey, Chocolate, Ingredients