Conspiracy alleged in the bread aisle
At least seven companies investigated in bread price-fixing probe
OTTAWA — The Competition Bureau’s investigation into allegations of bread pricefixing includes at least seven companies from bakery wholesalers and discount chains to Canada’s three major grocers, according to court documents.
George Weston Ltd. (TSX:WN) and Loblaw Companies Ltd. (TSX:L) admitted Tuesday to participating in an industry-wide bread price-fixing arrangement for over a decade and tipping off the country’s competition watchdog.
The Competition Bureau executed search warrants at the offices of a number of grocers earlier this fall, but has said there has been no conclusion of wrongdoing and no charges have been laid.
The investigation began on Aug. 11 and was expanded on Oct. 23.
The search warrants and information to obtain them were sealed because of concerns by the watchdog that the release of the information might compromise its investigation. However, the affidavits sworn by a Competition Bureau investigator to have them sealed were unsealed by the court this week.
According to those affidavits, the regulator is also investigating the alleged involvement of Canada Bread, Walmart, Sobeys (TSX:EMP.A), Metro (TSX:MRU) and Giant Tiger as well as “other persons known and unknown.”
“The bureau is collecting facts to deter- mine the precise time frame of, and the participants in, the alleged conspiracy,” Simon Bessette, a senior competition law officer, swore in an affidavit on Oct. 26.
“Analyzing the records the bureau obtains from the search warrants sought in the ITO will take time; however, it would only be after such analysis is performed that the bureau would be in a position to determine whether additional investigative steps are required.”
“Should details of the bureau’s ongoing investigation be made available to the public, the integrity of the evidence available through further investigative steps and/or court authorizations may be compromised,” Bessette wrote.
Metro said in a statement Tuesday that it continues to co-operate with authorities and it has launched an internal investigation.
“Based on the information processed to date, we have found no evidence that Metro has violated the Competition Act and we do not believe that the bureau’s investigation will have a material adverse effect on the corporation’s business, results of operations or financial condition,” the statement said.
Sobeys Inc., Canada Bread and Walmart Canada also said they were fully co-operating.
Weston and Loblaw said Tuesday they became aware of an arrangement involving the co-ordination of retail and wholesale prices of some packaged breads from late 2001 until March 2015.
The companies said they established an independent compliance office earlier this year and provided training and re-certification to marketing personnel at Weston Bakeries and all merchants and store managers at Loblaw, as well as senior managers at both companies and at parent company George Weston.
The employees responsible for the companies’ role in the arrangement are no longer employed there.
Loblaw is also offering eligible customers a $25 gift card that can be used at its grocery stores across Canada.
The Competition Act prohibits agreements that “prevent or unduly lessen competition or to unreasonably enhance the price of a product,” according to the bureau.
That could include agreements between competitors to fix prices, or to restrict production of a product by setting quotas or other means would be considered cartel activities. Penalties for price fixing could include fines of up to $10 million, imprisonment to a maximum term of five years, or both.
However, the bureau says price-fixing conspiracies are, by their nature, difficult to detect and prove.