Canada Bread pleads guilty in bread price-fixing scandal, will pay record $50-million fine

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, the owner of Canada’s biggest grocer, Loblaw Companies, and controlled by the Weston family. Both bakers have since been sold to new owners.

“Effectively, this was a fraud on the public,” Justice Maureen Forestell of the Ontario Superior Court of Justice in Toronto wrote in a decision on Wednesday approving the $50-million sentence, which was jointly proposed.

“The offences had a far-reaching and long-standing impact on the victims,” Forestell wrote. “Bread is a dietary staple for many and these offences affected millions of consumers.”

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 bread for years.

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.”

The bureau said it is continuing to investigate alleged price-fixing by other companies, including Metro, Sobeys, Walmart Canada, Giant Tiger Stores and Maple Leaf Foods.

“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 scandal first came to light in late 2017, when Loblaw Companies and its parent company George Weston admitted to their participation and received immunity from prosecution from the Competition Bureau. Loblaw offered $25 gift cards to customers as compensation.

Aside from Loblaw, the other grocers targeted by the Competition Bureau have all previously denied taking part in the alleged scheme.

Canada Bread’s new owner, Mexico’s Grupo Bimbo, which acquired the company in 2014 after the incidents of price fixing occurred, said Wednesday it is considering taking legal action against “those responsible for the conduct.”

Canada Bread said Wednesday that its new owner “was not told of, nor did it uncover, this prior conduct during the sales process” and only learned about it in 2017.

“Under new ownership, Canada Bread is committed to being a responsible partner to our valued customers,” said Alice Lee, vice-president of Canada Bread.

Maple Leaf Foods, meanwhile, said in an email that it was “completely unknown to us why Canada Bread or its owner would have entered into this plea agreement,” adding: “We are not aware of any wrongdoing by Canada Bread or its senior leadership during the time that we were a shareholder.”

Maple Leaf Foods added that it has “acted ethically and lawfully at all times,” and said, “We are not aware of and have never engaged in inappropriate or anti-competitive activity, and we will defend ourselves vigorously against any allegation to the contrary.”

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.

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 that 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.

The Competition 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.”

George Weston sold its bakery business to FGF Brands in 2021. An email seeking comment from FGF was not returned.

According to the judge’s ruling, Canada Bread has 30 days to pay the fine. The Competition Bureau said the money will be paid to the Receiver General of Canada and go into the federal government’s general revenues.

Jennifer Quaid, a competition law professor at the University of Ottawa’s Civil Law Section, said there was “no denying the significance” of the guilty plea on Wednesday. Quaid said that while there have been bigger international conspiracies involving companies operating in Canada, this case involves major domestic players and “involves a product many people buy.”

“These cases do take a long time to investigate,” she said, adding that there could be more developments to come with the other companies the bureau is pursuing. “The question in my mind is will this be the first in a series?”