National Post (National Edition)
Court document suggests 'genesis' of alleged scheme
TORONTO • An alleged bread price-fixing scandal that has ensnared some of Canada’s largest bakers and grocers may have had its “genesis” in a PowerPoint presentation on the industry’s lacklustre profitability, according to allegations made in recently released portions of a court document.
Those new details are contained in an Information to Obtain application, which was connected to search warrants issued as part of the Competition Bureau’s probe into the alleged price fixing.
Accusations made in the document, which is a sworn affidavit by Competition Bureau official Simon Bessette, have not been proven in court.
The newly revealed paragraphs come under the heading “Genesis of the Alleged Conspiracy, Agreement or Arrangement — Direct Communications.”
They centre on what Bessette says he was told about an individual known as “Person X,” a former employee of Canada Bread whose identity has been protected in court proceedings.
Bessette says he was told by a source, whose identity remains redacted, that Person X had prepared a PowerPoint presentation, the basis of which was “that the profitability of the fresh bakery shelf at retail was underperforming, and then the wholesale side, the manufacturers, were underperforming as well from a price realization standpoint.”
“Person X did comparisons to cereal and other grain-based products to show that bread was undervalued, but particularly undervalued when it came to the profitability performance of bread shelves,” the source said, according to the document.
Person X had also allegedly mentioned a plan, "whereby Person X was going to the retailers to get their buy-in for a price increase with the goal of orchestrating alignment through the retail community.”
“Clearly when (Person X) left the meeting, Person X had a feeling and a sense that I was anxious and willing on behalf of Weston Bakeries to comply with an increase,” the source stated, according to Bessette’s affidavit.
In a press release, Scott Fenton, the Toronto lawyer who has represented Person X, said there “is no evidence whatsoever against our client.”
“At the highest, the source claims to have had a 'feeling’ that Weston should raise prices — not that there was an offer or agreement to do anything, and certainly not to fix prices on bread,” Fenton said.
“This is a shoddy warrant built on false allegations, assumptions, inferences and innuendo that would rightly be inadmissible in any court. As the investigation continues, our client hopes the truth comes to light and justice will be served.”
In May, Fenton was successful in arguing that Person X should remain anonymous, with Superior Court Judge Lynn Ratushny agreeing that “the applicant is properly characterized under (a section of Canada’s Criminal Code) as an ‘innocent person.’” The judge also noted that no charges had been laid and that the “remembrance remains untested.”
A spokesperson for Canada Bread directed the Financial Post to a statement the company made in January, wherein it was noted that the alleged conduct dates back to a time when the baker was under different ownership. Canada Bread is currently owned by Mexico-based Grupo Bimbo, S.A.B. de C.V.
“The allegations do not reflect the Canada Bread we know,” the statement said. “Our current leadership takes these allegations very seriously and are actively investigating to take the necessary measures. We are co-operating fully with the Bureau as it conducts its inquiry and will not be making any further comment at this time.”
The court documents unsealed earlier this year accused Canada Bread and Weston Bakeries, the country’s two biggest bread producers, of taking part in a price-fixing scheme with major grocers — including and
— that inflated the price of bread by at least $1.50 between 2001 and 2015.
The Competition Bureau’s investigation began in March 2015 after whistleblowers at Weston Bakeries, its parent company George Weston Ltd. and Loblaw, the country’s biggest grocery chain, approached the federal department to disclose their participation in the alleged activity.
Loblaw and George Weston (Loblaw’s largest shareholder) admitted publicly in a Dec. 2017 press release that they had participated in an “industry-wide price-fixing arrangement involving certain packaged bread products.”
Sobeys, Metro and Giant Tiger have all previously denied participating in any alleged scheme and Walmart Canada has previously declined comment, citing the ongoing Competition Bureau investigation.