Chocolate, The Free-Market Battleground
I’m a chocoholic. Can’t eat it as much as I used to. So, this bit of news by way of C & L caught my eye. I’ll let the article speak for it’s self.
As a result of a settlement with the Hershey’s Company (HSY), Let’s Buy British Imports, or L.B.B., agreed this week to stop importing all Cadbury’s chocolate made overseas. The company also agreed to halt imports on KitKat bars made in Britain; Toffee Crisps, which, because of their orange packaging, and yellow-lined brown script, too closely resemble Reese’s Peanut Butter Cups; Yorkie chocolate bars, which infringe on the York peppermint patty; and Ms. Perry’s beloved Maltesers.
Jeff Beckman, a representative for Hershey’s, said L.B.B. and others were importing products not intended for sale in the United States, infringing on its trademark and trade dress licensing. For example, Hershey’s has a licensing agreement to manufacture Cadbury’s chocolate in the United States with similar packaging used overseas, though with a different recipe.
“It is important for Hershey to protect its trademark rights and to prevent consumers from being confused or misled when they see a product name or product package that is confusingly similar to a Hershey name or trade dress,” Mr. Beckman said in an email.
It’s that different recipe that gets me regarding the “free market” and “competition”.
Chocolate in Britain has a higher fat content; the first ingredient listed on a British Cadbury’s Dairy Milk (plain milk chocolate) is milk. In an American-made Cadbury’s bar, the first ingredient is sugar.
American Cadbury bars also include PGPR and soy lecithin, both emulsifiers that reduce the viscosity of chocolate, giving it a longer shelf life. British Cadbury bars used vegetable fats and different emulsifiers.
Funny how this works now. In the past Japan pushed our auto industry into building better cars. You know, global economy, down with tariffs and all. So what do we call it when licensing agreements end up acting like tariffs? I wonder if Cadbury can file a claim in the world court for lost revenues? Well, they have a “license agreement” so I guess not.
Should we allow license agreements that basically act like a tariff, or worse, as in this case, a complete shut-out of the market? Well, I guess Cadbury is not completely shut out. We get to see their name on the wrapper.
What about the loss of money for the importer? How is the World Bank’s Tribunal system supposed to resolve the contest between importers and local producers? And, why would Cadbury sign such a thing? Are they just a holding company now so it’s money without working? Licensing fees, royalties and all that.
Where is my free choice in this? Hell, where is my choice at all? Is simply a name change and wrapping enough to suggest that I am actually buying a different product from Hershey? Am I buying from Hershey or Cadbury regarding monopoly practices?
With all these international corporate agreements, is the consumer really getting a choice? Remember when Sunbeam was sold? It was a big deal on the news. The purchaser said they only wanted the brand name.
Oh and TPP too.
[TM Editors' Note: L.B.B. is a New-Jersey based importer, importing British goods into the U.S.]
Disclosure: None.
Seems like there are two different issues here. 1) The Cadbury's we can buy in the U.S. isn't the same as the Cadbury's one buys in Britain because it's been licensed by Hershey, and presumably because that license allows Hershey to change the formula for the U.S. market. Consumers may not know this, but Cadbury's presumably thinks it does better by taking money from Hershey for the license than by trying to sell into the U.S. market. You have not addressed whether or not there is a similar deal in the opposite direction, i.e. whether Cadbury's licenses Hershey in the U.K. 2) When a deal is in place between two companies, does an importer have the right to violate that deal? Is L.B.B. selling 'not for export to US' product? I don't see anything in this suit saying that Cadbury condoned the export, or was involved.