It's Friday and it was not a good week for RMCF, their stock price decreased and ended the day at $6.00. The rest of the industry saw an overall decrease for the week, except Tootsie Roll they had a .08% increase.
My news for today is price fixing, last year my teammates and I gave a presentation on Hershey being sued for price fixing, I thought that this had been settled, but it hasn't. Hershey, Mars, Nestle, and Cadbury that control 75% of the US chocolate market shares, are accused of price fixing from 2002-2007. The chocolate companies tried to get the price fixing thrown out of court, but the judge said "no" and told them that they could appeal his decision. Consequently, the US, Canada, Europe, and Germany of looking into whether the price fixing actually occurred. They raised prices three times between 2002-2007 first by 10%, 6%, and 5% and they planned on raising prices again in 2008. I actually believe that the companies did fix the prices, they act like a cartel and then just decided what they would charge and what the output would be. Over the years candy prices have had extreme price increases and there is less chocolate in the package, but overall I do not think will hurt them, because it is not in the news about the price fixing and if the companies are found quilty, they will pay the fines, continue business like normal, offer an apology, but will probably lobby Congress and the judges to keep this quiet or get it thrown out of the courts.
http://finance.yahoo.com/news/Judge-allows-appeal-in-candy-apf-14897349.html?.v=2
http://www.law.com/jsp/article.jsp?id=1202429840615
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Nichole
ReplyDeleteI haven't heard anything about price fixing. I remember the ArcherDanielMidland case (they were price fixing lysine an additive to animal feed and other products. It was extremely hard to prove.
Sometimes it can be a "follower" phenomena -- one player raises their prices and the rest follow without overt or intended collusion. However, these execs all know each other -- I wouldn't put it past them.