Mondelez, Kraft Say Regulator Violated Pact -- WSJ
August 16 2019 - 3:02AM
Dow Jones News
By Micah Maidenberg
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 16, 2019).
Two of the largest food manufacturers in the U.S. said the
federal government's commodities regulator failed to hold up its
end of a deal that settled a 2015 lawsuit related to alleged
manipulation of the wheat futures market.
Mondelez International Inc. and Kraft Heinz Co. said statements
made by the U.S. Commodity Futures Trading Commission on Thursday
violated the terms of a consent order agreed to this week that
settled the lawsuit.
The consent order says parties involved in the case would
refrain from publicly commenting about it, other than referring to
"the terms of this settlement agreement or public documents filed
in this case."
On Thursday, the regulator announced the settlement with
entities connected to Mondelez and Kraft that allegedly manipulated
the market for wheat futures.
"Market manipulation inflicts real pain on farmers by denying
them the fair value of their hard work and crops," Heath Tarbert,
chair of the commission, said in a press statement. "It also hurts
American families by raising the costs of putting food on the
table.
Mondelez and Kraft plan to seek relief in court over the
commission's messages about the cases, the companies said in
separate statements.
"The commission's statement is fully compliant with the terms of
the consent order," a spokesman for the regulator said.
Four years ago, the agency sued the entities, claiming they
developed a plan in 2011 to purchase December-dated wheat futures
contracts, thus signaling that food makers and grain processors
planned to buy large quantities of wheat at the end of that
year.
The prices to purchase physical wheat before December fell,
permitting the Mondelez and Kraft entities to take profits and save
money, the commission said in the lawsuit. Both entities have
denied manipulating the market, according to a court filing.
The settlement requires the Mondelez entity to pay a $16 million
fine and abide by an injunction prohibiting violations of a law
governing commodity trading, according to court documents. The
predecessor company of Kraft Heinz must also follow the injunction,
but doesn't have to pay a fine, according to an order.
Deerfield, Ill.-based Mondelez International was formed in
October 2012, when its former parent company spun off the Kraft
North American grocery business into a separate company. That
company in 2015 completed a merger with H.J. Heinz Co., forming
Kraft Heinz.
Two members of the Commodity Futures Trading Commission said it
was unusual for the regulator to be limited in what it can say
about any particular case.
Commissioners Dan Berkovitz and Rostin Behnam also said the
language of the consent order in question doesn't restrict
individual commissioners from commenting on the matter.
"In our view, in future situations, the commission should not
accept any confidentiality provisions or restrictions on the
commission's ability to make public statements," the two
commissioners said in a joint statement.
Both voted in favor of the agreement.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
August 16, 2019 02:47 ET (06:47 GMT)
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