A storied Canadian producer of bread and bakery products has a month to pay a $50 million fine for price-fixing in an ongoing federal probe which still has eyes on several major retailers.
Ontario’s Superior Court on Wednesday sentenced Toronto-based Canada Bread Co. after the company pled guilty to four counts of fixing bread prices in 2007 and 2011.
The allegations to which Canada Bread pled guilty came to light in an “industry-wide” federal investigation launched in 2017 by the Competition Bureau. The bureau defines price-fixing as a form of illegal cartel behaviour in which two or more competing businesses agree to set the same prices for goods or services.
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According to the federal Public Prosecution Service, an agreed statement of facts filed in court has Canada Bread — which at the time was majority-owned by Maple Leaf Foods — admitting it entered into arrangements with competitor Weston Foods and others to increase wholesale prices on four occasions.
The arrangements, according to the statement of facts, led to two price increases — one each in October 2007 and March 2011. The Competition Bureau, in a separate release Wednesday, said the increased prices affected “various bagged and sliced bread products, such as sandwich bread, hot dog buns and rolls.”
Canada Bread, citing court documents, said that in 2007 and 2010-11, “one or more” senior executives at Weston made four pricing arrangements directly with the then-CEO of Canada Bread.
Weston, its sister firm Loblaw and their parent firm George Weston Ltd. have received immunity from prosecution in exchange for “full co-operation” with the bureau’s investigation, the bureau said.
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The $50 million fine on Canada Bread was the maximum applicable, at $10 million each for the pre-2010 counts and $25 million each for the remaining two counts, minus a “leniency rebate” of about 30 per cent, given the company’s guilty plea and current co-operation with the probe.
The Competition Bureau on Wednesday described the record fine for Canada Bread as a “significant milestone” in its ongoing investigation, looking at alleged price-fixing between producers to raise wholesale bread prices, as well as alleged price-fixing between grocery stores to raise retail prices.
That ongoing probe continues to investigate other companies, the bureau said Wednesday, naming Maple Leaf as well as retailers Metro, Sobeys, Wal-Mart Canada and Giant Tiger. The bureau said its probe has included search warrants executed at those companies as well as at Canada Bread and at Overwaitea, the B.C. parent of retailer Save-On-Foods.
“Fixing the price of bread — a food staple of Canadian households — was a serious criminal offence,” Matthew Boswell, Canada’s commissioner of competition, said in the bureau’s release. “Our continuing investigation remains a top priority. We are doing everything in our power to pursue those who engage in price-fixing.”
As for Canada Bread, the senior leadership responsible for the price-fixing is no longer with the company, the bureau said. Canada Bread has been owned since 2014 by Mexican bakery giant Grupo Bimbo and now operates under the name Bimbo Canada.
Canada Bread, which went by that name in a separate release Wednesday on the matter, emphasized in that release that Grupo Bimbo “was not told of, nor did it uncover, this prior conduct during the sale process” and that Bimbo “only learned about the conduct in 2017.”
Since then, Canada Bread said, its new management has provided “material and consistent co-operation” to the Competition Bureau in the probe and has “established controls and initiatives to create a first-tier compliance program.”
“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,” vice-president Alice Lee said in Wednesday’s release. “We are pleased to have resolved this matter, and we look forward to building upon our investments in Canada.”
Canada Bread also said Wednesday that Bimbo is “considering all legal options against those responsible for the conduct addressed in court today.”
Bimbo Canada today operates 16 bakeries and 11 distribution centres across Canada. Its retail bread brands include Dempster’s, Pom, Stonemill, Bon Matin and Ben’s, among others. — Glacier FarmMedia Network
