Opinion ID: 2936316
Heading Depth: 2
Heading Rank: 1

Heading: The U.S. Chocolate Industry

Text: The U.S. chocolate confectionary market is dominated by three companies: Hershey, Mars, and Nestlé USA. Hershey is a publicly traded company based in Hershey, Pennsylvania, and sells such famous brands as Hershey’s Milk Chocolate Bar and Reese’s Peanut Butter Cups. Mars is a privately held company headquartered in Virginia and is the parent company of Mars Snackfood U.S. Among Mars’s most notable brands are M&Ms and Milky Way. Nestlé USA is a U.S.-based company wholly owned by Switzerland-based Nestlé S.A. Nestlé USA sells such popular brands as Nestlé Crunch and Butterfinger. Besides offering a variety of chocolate candy brands, the Chocolate Manufacturers offer a variety of sizes. Some sizes, such as single- and king-size 2 Because we conclude that the District Court correctly granted summary judgment for the Chocolate Manufacturers, we do not reach the secondary question of whether the District Court abused its discretion by excluding a portion of the Individual Plaintiffs’ economic expert’s report calculating the damages caused by Nestlé USA. 8 bars (“singles” and “kings”), are for immediate consumption, while others, including bags containing miniature or bite-size candies, are for future consumption. This case focuses on immediate consumption candy sizes. The U.S. chocolate market is highly concentrated. During the relevant period, these three companies controlled more than 75% of the U.S. market, with Hershey controlling approximately 42%, Mars controlling approximately 28%, and Nestlé USA controlling roughly 8%. The primary raw materials for the various chocolate products at issue are generally the same: cocoa, sugar, dairy products, peanuts, almonds, fats, and oils. Naturally, the costs of these ingredients affect the prices of the chocolate products. To hedge against cost increases for these ingredients, the Chocolate Manufacturers take advantage of futures exchanges. For example, in a 2002 internal report, Hershey understood that through futures contracts, its coverage on cocoa costs “through mid-2004” was “favorable versus [its] principal competitors.” J.A. 4620. Still, between 2002 and 2007, it is undisputed that cocoa prices increased. See J.A. 6273–74 (acknowledging that Hershey’s actual cocoa costs increased from 2002 to 2006). Parallel price increases—in which one company raises prices and its rivals follow—are not uncommon in this industry. Although the price increases have not followed a consistent playbook—some have involved changes in candy weight while others have involved delays between the initial and subsequent pricing actions—the Chocolate Manufacturers raised prices together in 1979, 1981, 1984, 1986, 1991, and 1995.