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A Hershey Co. Hershey's chocolate bar is displayed with Cadbury PLC chocolate bars for a photograph in New York, U.S., on Thursday, Jan. 14, 2010.Daniel Acker/Bloomberg

Information handed over by Hershey Canada Inc. and Cadbury Canada Inc. as they began to co-operate with Competition Bureau investigators probing an alleged chocolate-bar cartel can be given to defendants in the case now facing criminal price-fixing charges, a judge has ruled.

The case, which saw the federal regulator lay charges in 2013 against the former president and chief executive officer of Nestlé Canada Inc. Inc., Bob Leonidas, has been stalled in a procedural battle over the disclosure of these documents.

The investigation into whether competitors were colluding to control the prices of chocolate bars in Canada has also seen charges laid against Mars Canada Inc., wholesale distributors network ITWAL Ltd. and two other chocolate industry executives.

It began after lawyers for Cadbury tipped off the Competition Bureau in 2007. The company intended to take part in the regulator's immunity program, which grants freedom from prosecution to the first company to alert the bureau about an alleged price-fixing scheme.

After investigators raided company offices with search warrants in late 2007, Hershey Canada Inc. also approached the bureau and offered to co-operate under the regulator's leniency program, which offers an easier ride to companies that are second in the door and agree to hand over information. Hershey pleaded guilty in 2013 and agreed to pay a $4-million fine.

But at a January hearing, Hershey and Cadbury tried to block a move to hand over information they had provided before they were formally granted immunity or leniency, claiming it should not be disclosed since it relates to confidential settlement talks and therefore should be subject to "settlement privilege." Some of the information had in fact already been disclosed to the defendants, and had already been used to obtain search warrants.

Lawyers for Mr. Leonidas, Nestlé, Mars and the others facing charges argued they were entitled to see the documents – including others the Competition Bureau refused to hand over – to meet the case against them.

In a decision dated Feb. 4, Mr. Justice Ian Nordheimer agreed, ruling that any "factual information" should be handed over, excluding legal opinions or discussions over the wording of the immunity and leniency agreements.

In his ruling, he says Hershey and Cadbury (which is now Kraft Canada Inc.) knew full well that information they were providing would be used in a subsequent prosecution: "A consequence of this reality is that it does not lie comfortably in the mouths of Cadbury or Hershey to now complain that the disclosure of information, (that was provided by them to the Bureau in these circumstances and that has evidentiary value), to persons who are accused, is somehow unfair to them or is an unexpected result."

It is a legal question that has rarely come in the courts before in any context, let alone in a price-fixing proceeding. At one point, Justice Nordheimer refers back to the 1994 ruling in the case of serial killer Paul Bernardo, in which Justice Patrick LeSage ruled that the Crown had to hand over information provided through its notorious plea deal with his wife, Karla Homolka. That ruling stated that settlement privilege should apply only to information that incriminated the person making the plea deal, not other accused.

While Hershey and Cadbury argued that ruling against them could see other companies decline to come forward and voluntarily report alleged price-fixing schemes, Justice Nordheimer dismissed this notion, noting that the Competition Bureau did not raise any such concern in its submission.

Subrata Bhattacharjee, a competition lawyer with Borden Ladner Gervais LLP, said he did not believe the ruling would hamper the Competition Bureau's immunity or leniency programs, which are key to its ability to pursue price-fixing schemes.

"The question is whether this means that parties will be less likely to participate in the Bureau's immunity and leniency programs," Mr. Bhattacharjee said. "However, given the very significant benefits to parties presented by those programs, I suspect that as a practical matter this will not be the case."

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