Cadbury Schweppes, Hershey, Mars and Nestle price-fixing?

DISCUSSION TOPIC:  Retailers Sue Chocolate Companies Over Alleged Price Fixing

TOPIC SUMMARY:

Giant Eagle, Hy-Vee, Kroger, Meijer, Publix, Rite Aid, Safeway and Walgreens, have all recently filed lawsuits alleging that the major chocolate companies selling products in the U.S. have engaged in price-fixing.

A lawsuit filed last week by Giant Eagle against Cadbury Schweppes, Hershey, Mars and Nestle alleges that the companies have colluded on prices going back to 2002.

The suit, as reported by The Wall Street Journal, contends, “The chocolate confectionery product market was ripe for collusion. In addition to the collective market power exercised by the defendants…defendants’ profits from these products have suffered in recent years because of increasing health concerns, and changing consumer preferences, with respect to chocolate consumption.”

Discussion questions:  Isn’t it common in commodity-based categories such as cocoa, coffee, paper, oil, wheat, etc. that prices rise or fall across the board at roughly the same rate and pace? Why do you see retailers filing suits against chocolate manufacturers when they have not done the same in other categories where competing companies take price increases on virtually the same schedule?

My post:

This will be interesting to watch.  On the one hand, it seems ludicrous that typical commodity pricing processes based on matching what the leaders are doing would be construed as price-fixing.  This process happens daily with local gasoline station prices, milk, etc.  This is not price-fixing, it is just typical competitive pricing:  charge as much as the market will bear and don’t appear to be pricey compared to the local competition.  On the other hand, it would seem odd that these top retailers would go to the time, expense, and distraction of a lawsuit if there weren’t extremely compelling evidence of actual price-fixing which would involve proof of direct communication between these manufacturers to fix chocolate prices.  As I said, this will be interesting to watch.

Mike Osorio, your Dare to be Contagious! TM strategist

http://www.osoriogroup.com/

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12866   

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