Canada Bread pleads guilty in bread price-fixing scandal, will pay record $50 million fine
Canada Bread has admitted to colluding with rival Weston Foods to set Canadian bread prices, marking a major development in the Competition Bureau's seven-year investigation into one of the largest price-fixing scandals in the country's history.
The plea agreement from Canada's largest producer and distributor of fresh bread and bakery products includes a record $50-million fine for co-ordinating price hikes with Weston Foods in 2007 and in 2010-11.
At those times, Canada Bread was controlled by Maple Leaf Foods, itself controlled by the McCain family, while Weston Foods was a division of George Weston Ltd., the owner of Canada's biggest grocer, Loblaw Companies Ltd., and controlled by the Weston family. Both bakers have since been sold to new owners.
Justice Maureen Forestell of the Ontario Superior Court of Justice in Toronto approved the sentence of $50 million, a jointly proposed figure, on Wednesday.
It's the first plea agreement to come out of the Competition Bureau's seven-year investigation into allegations that some of the country's largest commercial bakers and grocers fixed the price of packaged bread, a staple food for many Canadians.
The Competition Bureau said the penalty Canada Bread will pay for its role in hiking prices on various bagged and sliced bread products, such as sandwich bread, hot dog buns and rolls, is the highest price-fixing fine imposed by a Canadian court to date."
According to an agreed statement of facts filed in court on Wednesday, the then-chief executive officer of Canada Bread spoke with one or more senior executives at Weston Foods about co-ordinating price increases on four different occasions in 2007 and in the 2010-11 time period.
Those discussions led to two co-ordinated increases to the wholesale price of bread, which is what the bakers charge grocers, who typically pass those costs along to customers at the checkout.
The scandal first came to light in late 2017, when Loblaw Companies and its parent company George Weston admitted to their participation in the scandal and received immunity from prosecution from the Competition Bureau. Loblaw offered $25-gift cards to customers as compensation.
According to the court filing, the bureau's investigation into other market participants continues. The bureau executed search warrants at various points in 2017, 2018 and 2019 against Metro, Empire Company (Sobeys) , Walmart Canada, Giant Tiger Stores, Overwaitea Food Group and Maple Leaf Foods.
Aside from Loblaw, the other grocers targeted by the Competition Bureau have all previously denied taking part in the alleged scheme.
Fixing the price of bread - a food staple of Canadian households - was a serious criminal offence," Commissioner of Competition Matthew Boswell said in a statement. Our continuing investigation remains a top priority. We are doing everything in our power to pursue those who engage in price-fixing."
The bureau said Canada Bread received leniency in sentencing in return for its full co-operation with the Bureau's investigation," and it also noted that the senior leadership of Canada Bread responsible for the price-fixing is no longer with the company."
Maple Leaf Foods owned a controlling stake in Canada Bread until 2014, when it sold the division to Mexican company Grupo Bimbo.
In a press release Wednesday, Canada Bread said that its new owner was not told of, nor did it uncover, this prior conduct during the sales process."
The company said Grupo Bimbo only learned about the price-fixing agreements in 2017.
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," said Alice Lee, vice-president of Canada Bread.
The press release said Grupo Bimbo is considering all legal options against those responsible for the conduct addressed in court today."
George Weston sold its bakery business to FGF Brands Inc. in 2021.
According to the agreed statement of facts, after the bakery executives spoke in July, 2007, Canada Bread, followed by Weston, announced 7 cent price hikes to take effect in October.
But following further discussions, both companies amended their new prices and in September, Canada Bread said it would increase prices by 12 to 14 cents and, two days later, Weston said it would increase its own prices by 16 cents.
The agreed statement of facts outlines a similar series of events in late 2010 and early 2011. The executives first agreed to and announced wholesale price increases of 7 cents per unit but later agreed to slightly different, but higher increases.
According to the judge's ruling, Canada Bread has 30 days to pay the fine.
More to come