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Regulators contend bread price-fixing scheme began in 2001 and spanned at least 14 years
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A key player in a bread price-fixing scandal that rocked Canadian supermarket chains has settled with the Competition Bureau over its role in co-ordinated price increases.
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Grupo Bimbo, a Mexican company that bought control of bakery wholesaler and distributor Canada Bread Co. Ltd. from Maple Leaf Foods Inc. in 2014, will pay a $50-million fine to settle allegations over Canada Bread‘s role in price fixing.
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Loblaw Cos. Ltd., which is co-operating with regulators, has alleged that the scheme was industry-wide, involving several retailers and two wholesale bread distributors and spanning at least 14 years beginning in 2001, according to court documents.
The Competition Bureau is continuing its multi-year investigation into a number of companies — including Metro Inc., Sobeys Inc., Wal-Mart Canada Corp., Giant Tiger Stores Ltd., and Maple Leaf Foods, some of whose senior executives had overlapping executive and board duties at Canada Bread before it was sold to Grupo Bimbo.
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The Mexican company said the fine it agreed to pay in the settlement, overseen by the Ontario Superior Court, relates to two wholesale price increases implemented by Weston Foods and Canada Bread “more than a decade ago, when Canada Bread was majority owned and controlled by Maple Leaf Foods.”
In an agreed statement of facts filed in court, Canada Bread pleaded guilty to four counts involving communications that took place between a former senior officer at Canada Bread and one or more senior executives at Weston in 2007, 2010 and 2011, which led to the two price increases.
In a statement, Grupo Bimbo said it was unaware of the price-fixing scheme when it bought Canada Bread and has offered “material and consistent co-operation” to the Competition Bureau since learning about the alleged conduct in 2017. In addition, the company said it is considering “all legal options against those responsible for the conduct” addressed in the court proceedings.
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In a separate statement on June 21, 2023, the Competition Bureau said Canada Bread was entitled to leniency in exchange for co-operation and the guilty plea but was handed the maximum penalty available under the law minus a “leniency discount.”
The Bureau said the “record” fine represented a significant milestone in the ongoing investigation.
“Fixing the price of bread — a food staple of Canadian households — was a serious criminal offence. Our continuing investigation remains a top priority,” said Commissioner of Competition Matthew Boswell.
“We are doing everything in our power to pursue those who engage in price-fixing.”
Alice Lee, vice-president of Canada Bread, which Grupo Bimbo agreed to buy for $1.83 billion in February of 2014, said the company is pleased to have resolved the matter and looks forward to building on its investments in Canada.
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In an emailed statement, Maple Leaf Foods said it had just learned of the fine levied against Canada Bread and said it is “completely unknown” why Canada Bread or its owner entered into the plea agreement.
“We are not aware of any wrongdoing by Canada Bread or its senior leadership during the time that we were a shareholder,” the statement said.
“We have acted ethically and lawfully at all times. We are not aware of and have never engaged in inappropriate or anti-competitive activity, and we will defend ourselves vigorously against any allegation to the contrary.”
In 2015, Loblaw Cos. Ltd. and parent company George Weston Ltd., which owned wholesaler and distributor Weston Bakeries until 2021, approached the Competition Bureau and revealed their role in a multi-year scheme allegedly involving wholesale and retail competitors in the sale of fresh bread products including buns, English muffins and tortillas.
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The alleged industry-wide co-ordinated price setting became public in 2017 and, in early 2018, the bureau filed documents in court alleging that at least $1.50 had been artificially baked in to the price of a loaf of bread between 2001 and 2016 as a result of the co-ordinated scheme, which regulators said may have extended into 2017.
In exchange for co-operation with the Competition Bureau, Loblaw and Weston received immunity from prosecution and, as a goodwill gesture intended to appease customers, the grocery chain offered $25 gift cards in 2018 to anyone who may have bought bread at inflated prices.
At the time, legal observers questioned whether the courts would allow Loblaw and Weston to escape some financial liability in multiple class action lawsuits that were filed as a result of the issuance of gift cards. It was estimated the gift cards would cost Loblaw between $75 million and $150 million, depending on uptake by customers.
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Investigation into bread price-fixing scheme isn’t finished
Loblaw bread-price fixing gift card nets more backlash
Retailers face tough outcomes in bread price-fixing scandal
The Competition Bureau’s investigation has included the execution of search warrants against Weston, Loblaw, Metro Inc., Empire Co. Ltd.’s Sobeys, Walmart Canada, Giant Tiger Stores Ltd. and Canada Bread. Court documents filed by the bureau in 2018 alleged an industry-wide scheme involving the grocers and wholesale bread product maker and distributor Canada Bread. At the time, officials from several of the grocers denied wrongdoing and none of the allegations against them have been proven.
• Email: bshecter@nationalpost.com | Twitter: BatPost
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