Canada Bread settles years-long price-fixing allegations, to pay $50-million fine

Canada Bread settles years-long price-fixing allegations, to pay $50-million fine

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 Canada Bread took part in a price-fixing scheme that regulators contend began in 2001 and spanned at least 14 years.

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The Competition Bureau is understood to be continuing its multi-year investigation into a number of companies — including Maple Leaf Foods, some of whose senior executives had overlapping executive and board duties at Canada Bread before it was sold to Grupo Bimbo.

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.”

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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.

“We are pleased to have resolved this matter, and we look forward to building upon our investments in Canada,” said Alice Lee, vice president of Canada Bread.

Grupo Bimbo agreed to buy Canada Bread for $1.83 billion in February of 2014.

A worker restocks shelves in the bakery and bread aisle at a grocery store in Halifax.
A worker restocks shelves in the bakery and bread aisle at a grocery store in Halifax. Canada Bread has settled allegations it took part in a price-fixing scheme that regulators contend began in 2001 and spanned at least 14 years. Photo by Kelly Clark/The Canadian Press

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.

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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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  1. The Competition Bureau started its inquiry in 2017 because investigators believed Canadian food companies had conspired together to control the price of commercial bread products since 2001.

    Investigation into bread price-fixing scheme isn’t finished

  2. Loblaw has said it is only collecting personal information for verification purposes and will then destroy it.

    Loblaw bread-price fixing gift card nets more backlash

  3. A range of nasty outcomes await Canada's largest grocers and bread producers.

    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.

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