Cadbury pleads guilty in salmonella case

Ban Hammer · June 15, 2007

LONDON (Reuters) - Cadbury Schweppes Plc (CBRY.L), the world's largest confectionery group, pleaded guilty on Friday to charges of selling unsafe chocolate in Britain and Ireland during 2006 and faces an unlimited fine.

Cadbury, which makes Dairy Milk chocolate, was appearing before Birmingham Magistrates' Court after Birmingham City Council prosecuted the London-based chocolate and sweets group over a salmonella-related scare.

"Cadbury has indicated that it will be pleading guilty to the charges brought by Birmingham City Council in relation to the contamination of certain Cadbury products last year," the group said in a statement.

Analysts said they expected any fine would not be material to the group, while the fact Cadbury admitted its guilt early and that it was mistaken that the infection did not pose a threat to health would be seen as mitigating factors.

The case is being referred to the higher Birmingham Crown Court, where fines are unlimited, and sentencing is scheduled to take place on July 13.

The council is prosecuting Cadbury under the UK General Food Regulations and Food Hygiene Regulations for, among other things, failing immediately to alert authorities it had reason to believe some of its chocolate was infected with salmonella.

"Mistakenly, we did not believe that there was a threat to health and thus any requirement to report the incident to the authorities -- we accept that this approach was incorrect," the Cadbury statement added.

A neighboring local council in Herefordshire said on Friday it is to prosecute Cadbury over the same alleged offence. Cadbury said it will be examining these charges.

Cadbury's UK chocolate manufacturing is based in Birmingham in the West Midlands, while the alleged offence took place at its Marlbrook plant in Herefordshire, 80 km south-west of Birmingham.

Cadbury has said it detected salmonella on January 19, 2006, at Marlbrook, which produces chocolate crumb mixture.

On June 23, the company admitted the problem, which was linked to a leaking pipe, and said it was recalling more than one million chocolate bars in the UK and Irish markets because they could contain minute traces of salmonella. It estimated the recall cost at 30 million pounds ($59 million).

The UK Health Protection Agency said later the most credible explanation of an outbreak of salmonella montevideo was the consumption of products made by Cadbury.

After months of investigation, Birmingham Council decided in April 2007 to press charges against Cadbury for selling unsafe chocolate products, failing to report salmonella immediately and for failing food hygiene and hazard controls.

Herefordshire council said it will prosecute Cadbury over six alleged offences related to not keeping its factory in good repair, the plant's layout and provision of adequate drainage, and also the cleaning and disinfection of equipment.

Cadbury is summoned to appear before Herefordshire Magistrates' Court on July 24.

Its shares edged lower after news of the guilty plea to stand off 1 percent at 708 pence by 1105 GMT, in a firmer London market. They stood at 710p before the news.

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