Mondelez International Inc. and The Kraft Heinz Co. will pay a $16 million penalty to settle allegations that they manipulated wheat prices in their favor earlier this decade, the CFTC said Aug. 15.
The allegations concern wheat prices in mid-2011, when the food companies allegedly attempted to reduce the spread between front-month wheat contracts and options for delivery in December 2011.
By buying $90 million of the latter contracts, the CFTC claimed, Mondelez and Kraft drove up their price, handing the companies a profit. At the same time, the change encouraged sellers to off-load wheat to Mondelez and Kraft for cash at lower prices than they would have without the bump in futures.
The actions allegedly netted more than $5 million in profit, according to the CFTC.
A spokeswoman for Mondelez said the CFTC's statements "blatantly violate and misrepresent the terms and spirit of the consent order" in the case, adding that Mondelez "will be seeking immediate relief from the court." The company declined to provide additional details on specific actions it would take.
A spokesman for Kraft Heinz did not immediately respond to a request for comment.
The CFTC filed its complaint before the 2015 merger between Kraft Foods and H.J. Heinz Holding Corp.
In a concurring opinion, Commissioners Dan Berkovitz and Rostin Behnam said the $16 million penalty "is as much as the Commission could reasonably expect to obtain if it were to prevail at trial." They said the commission agreed to restrictions on its ability to make public statements on the case as well as to issue findings.
In similar cases, the CFTC typically requires such findings, Berkovitz and Behnam said.
The companies have 90 days to pay the penalty, after which it will accumulate interest.