Bakery giant Canada Bread Co. has been fined $50 million after pleading guilty to its role in a criminal price-fixing scheme that inflated the price of bread in Canada for years.
It’s the highest price-fixing fine ever imposed by a Canadian court, Competition Bureau Canada said Wednesday.
The settlement is a significant milestone in the competition watchdog’s ongoing investigation into alleged bread price-fixing in Canada.
It comes as record food prices fuel consumer discontent with Canada’s food industry and fan distrust of grocers.
It also shines a spotlight on the Competition Bureau’s ongoing investigation into the role of other companies, including Metro, Sobeys, Walmart Canada, Giant Tiger, and Maple Leaf Foods.
“Fixing the price of bread — a food staple of Canadian households — was a serious criminal offence,” Matthew Boswell, Commissioner of Competition, said in a statement.
“Our continuing investigation remains a top priority,” he said. “We are doing everything in our power to pursue those who engage in price-fixing.”
Canada Bread, now a subsidiary of Mexico-based Grupo Bimbo, pleaded guilty to four counts of price-fixing under the Competition Act.
The bread maker admitted that it arranged with its competitor, Weston Foods (Canada) Inc., to increase prices for various bagged and sliced bread products, such as sandwich bread, rolls and hotdog buns, the Competition Bureau said.
The price-fixing scheme resulted in two price increases, one in 2007 and another in 2011, it said.
At the time of the price-fixing arrangement, Canada Bread was under the ownership of Maple Leaf Foods.
In an emailed statement, Maple Leaf Foods said it is “completely unknown” to the company why Canada Bread or its owner would have entered into this plea agreement. It said it is not aware of any wrongdoing by Canada Bread or its senior leadership during the time that Maple Leaf was a shareholder.
“We have acted ethically and lawfully at all times. We are not aware of and have never engaged in inappropriate or anticompetitive activity, and we will defend ourselves vigorously against any allegation to the contrary.”
Grupo Bimbo said it’s considering “all legal options against those responsible.”
“Under new ownership, Canada Bread is committed to being a responsible partner to our valued customers and making bread an accessible and reliable food source for Canadians,” Canada Bread vice-president Alice Lee said in a statement.
“We are pleased to have resolved this matter, and we look forward to building upon our investments in Canada.”
Food industry expert Sylvain Charlebois pointed out that it took an international company to step up and acknowledge the wrongdoing in Canada’s food industry.
“The paradox in all of this is we needed a Mexican company to clean the Canadian food industry up,” said Charlebois, a professor of food distribution and policy at Dalhousie University. “Nobody in Canada wants to admit guilt.”
He added: “The investigation is not over. More questions are going to be asked and Canadians will want more answers.”
The Competition Bureau began investigating alleged anti-competitive 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 Cos. Ltd., both subsidiaries of George Weston Ltd. at the time, had previously admitted their participation in an “industry-wide price-fixing arrangement” involving the co-ordination of retail and wholesale bread prices.
In exchange for their co-operation, the companies received immunity from prosecution.
The Competition Bureau alleged in court documents in 2018 that at least $1.50 was artificially baked into the price of a loaf of bread during the 16-year bread-price-fixing conspiracy involving the country’s largest bakery wholesalers and grocery retailers.
Experts say the scandal has given Canadians good reason to be skeptical about the cause of high food prices in recent months, especially as grocers post significant profits.