Bitter chocolate — cartel accused of price fixing

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Yet in addition to the government investigations, the companies are facing lawsuits from a gaggle of plaintiffs.

A New Jersey confectionery company filed the first lawsuit in late December, charging price fixing by an international cartel of companies — Hershey and Mars, the leading chocolate companies in the U.S., along with other companies such as Nestle and Cadbury Schweppes PLC.

The confectioners claim that a cartel raised prices three times since 2003 and planned another hike for 2008.

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German officials said the companies raided this week had agreed at the beginning of the year to raise prices.

At least 45 similar suits have been filed in eight states on behalf of more than 50 consumers and companies like CNS Confectionery Products of Bayonne, New Jersey.

CNS, a 13-year-old company that manufacturers chocolate products, sued its suppliers to get back what it called overpricing, said attorney Hollis Salzman, who represents CNS and whose firm seeks to lead the class action lawsuit.

Direct purchasers like CNS often do not want to sue their suppliers because they fear retaliation, but given the Canadian investigation, CNS's owners felt they had to step forward, Salzman said.

A federal court in Newark next week is scheduled to hear a motion to consolidate the 16 New Jersey cases. Another federal court will determine which district in the U.S. will hear the consolidated cases. After an initial hearing expected in late March, a decision could take months.

If the class action suit is successful, manufacturers like CNS could recover their share of the chocolate purchased, Salzman said.

Other plaintiffs would be eligible to collect damages if they purchased chocolate directly from the companies, either as manufacturers or from company-owned sites such Hershey Park in Pennsylvania or retail outlets such as Mars's M&M stores. That could involve potentially billions of dollars for hundreds of thousands of consumers, Salzman said.

Yet consumers aren't surprised to hear about the alleged plot.

"Oil and gas prices are fixed, and diamonds," said Owen Cullimore, 37, an accountant from Long Island, New York. "Why should chocolate be different?"

He buys about $50 worth of chocolate per year, including Cadbury bars with nuts. He said would not be bothered if he had been paying more.

"It's a nominal fee," Cullimore said.

Chocolate sales in the U.S. have been essentially flat for the last six years, hovering at just under $16 billion annually, excluding sales from Wal-Mart, said Marcia Mogelonsky, an analyst with Chicago-based market research firm Mintel International Group. Sales of dark chocolate, which has a perceived health benefit, and premium chocolate have increased and pulled market totals up, she said.

"People have been more educated about what good chocolate should taste like, and they're willing to pay for good chocolate," she said.

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