The news must have pleased many consumers: Loblaw and its parent company Weston are set to pay $500 million for their part in the bread price-fixing scheme. The legal victory would put money back in the pockets of defrauded customers, and more could follow. Here’s what you need to know.
What scandal is this?
For about fifteen years, from 2001 to 2015, several Canadian food giants allegedly agreed to fix the price of sliced bread, artificially inflating it.
The story first hit the headlines in 2017, when the Competition Bureau opened an investigation into several companies.
The case has greatly shaken the population, particularly because most of the major players in the Canadian food market were targeted. The owners of Loblaws, Provigo, Maxi, IGA, Metro and Super C grocery stores were all involved in the investigation, as were Walmart Canada, Giant Tiger and Canada Bread.
What just happened?
Alerted by the Competition Bureau’s investigation, consumers sought redress and turned to the courts. A class action was approved by the Superior Court of Quebec in 2019.
This is where there has been a development. The law firms representing the plaintiffs announced Thursday that Loblaw and Weston are preparing to reach an agreement with them, in which they will agree to pay $500 million.
This settlement would terminate all claims by Loblaw and Weston in this matter.
“On behalf of the Weston group of companies, we apologize for the price-fixing practice we discovered and reported in 2015. This situation should never have happened,” said Galen G. Weston, Chairman of Loblaw and Chairman and CEO of George Weston.
If all goes as planned and the court approves the deal, it will be the largest antitrust settlement in Canadian history.
Haven’t there been Loblaw cards distributed before?
As early as 2017, Loblaw and Weston publicly admitted their participation in the scheme, and launched a program to distribute $25 cards to eligible customers who registered online.
These cards could be used to purchase items sold at Loblaw-owned supermarkets.
The $96 million that has already been paid to consumers under this program will be taken out of the amount provided for in the agreement. This means that $404 million will actually have to be paid.
The Loblaw Card program is now closed and it is no longer possible to apply for one.
How much will consumers receive?
The $404 million, minus court-approved expenses, will be redistributed in cash to eligible consumers. This is a large group, since the class action concerns individuals, companies and associations residing in Quebec “who purchased at least one package of bread from 1er January 2001 and until December 19, 2019” in one of the businesses concerned, excluding frozen bread and bread baked on site.
It is not yet possible to know how much this will represent per person or the procedure that will have to be followed to receive the money. More details should be released by the end of the year.
Last year, the director of the Agri-Food Analytical Sciences Laboratory at Dalhousie University, Sylvain Charlebois, explained to The Press that the scheme had cost Canadian families an average of $350 to $4001.
On a national scale, this would be a sum of between 4.3 and 4.9 billion, he added.
And the other merchants involved?
This could well be the first settlement in a long series, as other merchants are still being targeted by the plaintiffs.
Class lawyers are now preparing for trial in the ongoing class actions against Sobeys, Metro, Walmart Canada, Giant Tiger and Canada Bread.
“It is important to note that the settlement agreement [avec Weston et Loblaw] “provides access to evidence that will be used in the proceedings against the other defendants,” said Jim Orr, a partner at Orr Taylor. “The expectation is that this will result in significant additional monetary recoveries for Canadian consumers.”
Has the Competition Bureau made any progress in its investigation?
The Competition Bureau, which has been investigating the issue since 2017, had Canada Bread, which sells POM, Villagio and Bon Matin breads, fined $50 million by the Ontario Superior Court last year. However, that money is not going back into consumers’ pockets.
Weston and Loblaw announced in 2017 that they had received immunity from criminal prosecution in exchange for their cooperation with the Competition Bureau.
The Bureau continues to investigate allegations of price fixing against other companies.
1. Read “Bread Price Fixing: A Little Tap on the Fingers”
Check out the class action against the fixing of packaged bread prices