Saturday, 2 March 2024

For a Price-Fixing Scam, Canada Bread Faces a $50M Penalties

A Canadian bread company, Canada Bread, has acknowledged conspiring with rivals in the sector to boost wholesale pricing for grocery chains, which increased consumer prices. Since 2014, Grupo Bimbo of Mexico has owned the company, which produces hundreds of brands of baked goods; before to that, Maple Leaf Foods held a significant stake.

A senior executive at Weston Foods (Canada) Inc., then a division of George Weston Ltd., which now owns the Loblaws grocery chain, spoke with a representative of Canada Bread regarding prices for bread goods at the time that he was also an officer at Maple Leaf Foods.

Canada Bread Faces a $50M Penalties

What transpired is described in the paperwork submitted to the Toronto Superior Court of Justice. The executives talked about boosting pricing in June 2007, and in October of that same year, they decided to do so by six to seven cents for each loaf.

They decided to hike prices by double that amount, or 12 to 14 cents, starting the next month after more deliberations in September. Later, discussions in November 2010 resulted in an agreement to hike prices by seven cents per loaf beginning in January or March of 2011. This pattern was repeated. Following a following meeting in January, it was decided to raise the price by 14 cents per loaf starting in February.

  • Canada Bread admits conspiring with rivals to increase wholesale grocery chain prices.
  • Price hikes increased by 12-14 cents, seven cents per loaf, and 14 cents per loaf, repeated in 2011-2012.
  • Bureau searches businesses and reveals four counts under Canadian Competition Act, potentially causing fines.

The bread price-fixing issue was first brought to light in 2015 when Canada’s Competition Bureau opened an inquiry after learning of the existence of the plan from Weston and Loblaw. The agency granted the two businesses immunity from prosecution in exchange for their cooperation.

Several businesses, including Weston, Loblaw, Metro Inc., Sobeys Inc., Walmart Canada, Giant Tiger Stores Ltd., Overwaitea Food Group, and Canada Bread, were the targets of additional search warrants carried out by the bureau. Four counts under Section 45 of the Canadian Competition Act have been admitted to by the company, each of which carries a potential fine of $10 million or $25 million.

The Director of Public Prosecutions, who takes cases when the Bureau discovers evidence of a potential criminal violation, has agreed to recommend a 30% “leniency reduction” for the company’s cooperation, bringing the total cost down to $50 million.

With the entry of this plea, Canada Bread claims that its culpability is no longer an issue, but it adds that the Competition Bureau’s investigation into other businesses is still ongoing. The $50 million fine is the largest price-fixing fine ever issued by a Canadian court and the first monetary penalty to result from the eight-year investigation by the bureau.

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