Canada Bread will be fined $50 million after pleading guilty to its role in a criminal price-fixing scheme that raised the wholesale price of commercial fresh bread for years.
This is the stiffest price-fixing fine ever imposed by Canadian justice, Canada’s Competition Bureau said on Wednesday.
The settlement is an important step in the Bureau’s ongoing investigation into allegations of bread price fixing in Canada.
It comes as record high food prices are fueling consumer dissatisfaction with Canada’s food industry and distrust of grocers.
It also highlights elements of the Competition Bureau’s ongoing investigation into the role of other companies, including Metro, Loblaw, Sobeys, Wal-Mart Canada, Giant Tiger and Maple Leaf Foods.
“Fixing the price of bread – a staple for many Canadian households – is a serious criminal offence,” Competition Commissioner Matthew Boswell said in a statement.
“The continuation of our investigation remains one of our top priorities,” he continued. We do everything in our power to prosecute those who engage in price fixing. »
Canada Bread, now a subsidiary of Mexico’s Grupo Bimbo, pleaded guilty to four counts of price fixing under the Competition Act.
The bread maker admitted to having entered into an arrangement with its competitor, Weston Foods, to raise the price of various sliced and packaged bread products, such as sandwich buns, hot dog buns and buns, the Bureau of competition.
Price-fixing has resulted in two price increases, in 2007 and 2011. Canada Bread’s senior executives responsible for price-fixing no longer work for the company, the Bureau said.
At the time of the pricing arrangement, Canada Bread was owned by Maple Leaf Foods.
Grupo Bimbo said it was considering “all legal options against those responsible”.
Maple Leaf Foods did not immediately respond to a request for comment.
“Under new ownership, Canada Bread is committed to being a responsible partner to its customers and to making bread an accessible and reliable food for Canadians,” said Canada Bread Vice President Alice Lee, in a statement.
“We are pleased to have resolved this matter and we want to continue to build on our investments in Canada. »
Consumer mistrust
Sylvain Charlebois, a food industry expert, insisted that an international company had stepped in and acknowledged the wrongdoings of the Canadian food industry.
“The paradox in all of this is that we needed a Mexican company to clean up the Canadian food industry,” he said. No one in Canada wants to admit guilt. »
“The investigation is not over,” continued Mr. Charlebois. More questions will be asked and Canadians will want more answers. »
The Competition Bureau began investigating alleged agreements between competitors to fix the price of fresh commercial bread in January 2016.
The investigation became public in 2017, when the first search warrants were executed.
Weston Foods and Loblaw, both subsidiaries of George Weston at the time, had previously admitted participation in an “industry-wide price-fixing agreement” involving the coordination of retail and wholesale prices for bread .
In return for their cooperation, the companies received immunity from prosecution.
In 2018 court documents, the Competition Bureau alleged that at least $1.50 was artificially added to the price of a loaf of bread during the 16-year-old bread price-fixing conspiracy involving the most nation’s largest bakery wholesalers and food retailers.
Experts say the scandal has given Canadians good reason to be skeptical about the cause of the sharp rises in food prices in recent months, especially as grocers post big profits.