The federal Competition Bureau vowed before the Ontario Court of Appeal in March that the former president and chief executive officer of Nestlé Canada Inc. would "shortly" face a criminal charge after the watchdog's five-year probe into an alleged price-fixing conspiracy in the chocolate-bar business. But months later, no charges have been laid.
Robert Leonidas, who was at the helm of Nestlé Canada from 2006 to 2010 and then spent about a year as head of Nestlé USA's food division, is among several people and companies targeted by the investigation, which has dragged on since 2007.
The prospect of a criminal charge against Mr. Leonidas was raised when he was before the Ontario Court of Appeal to fight an Ontario Superior Court ruling compelling him to provide a deposition to a court in the U.S., where plaintiffs' lawyers are pursuing a potential class-action lawsuit in Pennsylvania against an array of chocolate firms they allege engaged in price fixing.
In a ruling dated Nov. 27, the Ontario Court of Appeal says that a lawyer for the Competition Bureau told a March 26 hearing that the former Nestlé executive "was shortly going to be charged personally with criminal offences under the Competition Act … in respect of alleged price fixing of chocolate confectionery in Canada by a number of chocolate manufacturers."
Mr. Leonidas's Toronto lawyer, Jay Naster, said his client would fight any charge if one was laid: "In the event that Mr. Leonidas were to be charged, we intend to vigorously defend."
He said his client would not be interviewed for this story.
Before the Ontario Court of Appeal, Mr. Naster argued that Mr. Leonidas's constitutional right to remain silent in Canada during a criminal investigation would be at risk if he were forced to testify under oath for the U.S. proceeding. The Court of Appeal disagreed, upholding a lower-court ruling ordering him to provide the deposition but deeming its contents out-of-bounds for Competition Bureau investigators.
Mr. Naster said he plans to seek leave to appeal the ruling from the Supreme Court of Canada.
Allegations that executives with Nestlé, the maker of KitKat, Coffee Crisp and Big Turk, colluded with competitors in Canada to inflate prices were first revealed in 2007, after Competition Bureau investigators raided the offices of Nestlé, Hershey Canada Inc., Mars Canada Inc., and food distributor ITWAL Ltd.
In court filings to obtain those search warrants, the bureau alleged that executives met in restaurants, coffee shops and at conventions and that Mr. Leonidas once handed a competitor an envelope stuffed with his company's pricing information, saying: "I want you to hear it from the top – I take my pricing seriously."
Five years later, the allegations still have not been proven in court. And Mr. Leonidas, who works as a consultant in Toronto, has had the shadow of the investigation hanging over him.
In the meantime, class-action lawyers filed lawsuits on behalf of consumers and large chocolate purchasers against Nestlé and its competitors, based on the allegations that were made public in 2007. In Canada, those class-actions have been settled, with the companies agreeing to pay more than $20-million. Nestlé recently agreed to pay $9-million, without admitting liability, in a settlement subject to court approval in the new year. But a massive class-action continues in the United States.
Meanwhile, the state of the criminal investigation in Canada is unclear.
Contacted this week, the Competition Bureau said it does not comment on its investigations. Addressing a question on the delay in laying charges, it said in a statement that "the covert nature of cartels makes their detection and investigation time-consuming and labour-intensive."
The Competition Bureau has recently stepped up its enforcement of price-fixing, going after gasoline price-fixing rings in Quebec and Eastern Ontario. Penalties for such offences are also getting stiffer.
Until recently, prison sentences in price-fixing cases were rare in Canada. But the offence carries a 14-year maximum sentence, and recent legislative changes mandate that any sentence levelled for such a crime must be served in prison, not in the community.
Since leaving Nestlé, Mr. Leonidas – whose career in the Canadian food business stretches back to the 1970s – has served as a director on at least three boards of smaller companies. He is also listed as a member of the international advisory board of York University's Schulich School of Business.
In an e-mailed statement, Nestlé Canada said it was not aware of any new information on the Competition Bureau probe, and stressed it was not admitting any wrongdoing in agreeing to settle the Canadian class-action lawsuit.
Mars Inc. and Mars Canada Inc. have also recently agreed to tentative settlements in the Canadian class-action lawsuits against them for $3.2-million, while not admitting liability. In 2009, the plaintiffs in the Canadian action settled with Cadbury Adams Canada Inc., Cadbury Holdings Ltd. and ITWAL, as well as Hershey Canada Inc. and Hershey Co. The companies did not admit liability, but paid $11-million and agreed to co-operate with the plaintiffs as they continued to pursue the other companies allegedly involved.