We need to up our game against food price fixing

Consumer trust is at stake, writes Sylvain Charlebois.

We recently learned a Quebec-based group is leading the class-action lawsuit aimed at major federally licensed beef packers.

Cargill, JBS Food Company, Tyson Foods and National Beef Packing Company are accused of colluding and inflating beef prices since 2015. So, if you're a consumer in Quebec who's been buying beef since 2015, you can be part of the claim.

The authorization application was filed in the Superior Court of Quebec and the group will hear from courts later this year.

This claim does not appear to surprise anyone. Food prices have been skyrocketing for a while, especially beef. According to Statistics Canada, while ground beef is up only four per cent since January 2015, most beef cuts have gone up by anywhere between 30 per cent and 51 per cent. Only baby food and potatoes have seen sharper increases since 2015, so beef prices stand out.

Farmers have long complained about how little they get versus how retail prices behave at the grocery store. The correlation between the price farmers receive and retail prices has always been weak for most products.

But now, consumers are noticing and some groups are acting on concerns that something may not be quite right.

What is perplexing about the claim is how it aims at only a handful of packers. If collusion did occur at the meat counter, many other companies would have arguably benefited from artificially inflated prices, including retailers themselves.

Margins are significant in meat in food retailing, so grocers would have also increased profits as a result of higher wholesale prices.

The claim is likely inspired by what has happened in the United States in recent months. In December, the White House released a scathing report about how profits in the meat-packing sector have spectacularly increased, over 300 per cent since the start of the pandemic.

JBS USA, one of the groups targeted by the Canadian lawsuit, approved a $52.5-million (US) settlement in a lawsuit in which the company was accused of conspiring to boost beef prices. They never admitted guilt in the deal, though. Cargill Inc., National Beef Packing Co. and Tyson Foods Inc. were also named in the case, the selfsame companies mentioned in the Quebec-based claim.

When it comes to price fixing, the United States doesn't fool around. When Congress and the White House have concerns, they act on them. In Canada, not so much.

The bread price-fixing scandal, which came to light back in 2017 when Loblaw admitted having participated in an alleged industry-wide operation, opened the door to some public criticism. In 2017, Loblaw's Ghalen Weston strategically threw everyone in the industry under the bus when admitting Loblaw's involvement in a 14-year-long bread price-fixing scheme.

By admitting guilt and supporting the investigation, Loblaw received immunity from the Competition Bureau. The investigation did not provide evidence to prosecute anyone else, even though bread prices had gone up dramatically while the scheme was ongoing.

Now, a group in Ontario has been authorized to go ahead with a class-action lawsuit against the bread industry. The beef claim is the second one we have seen in Canada in just a few months.

Some will say these class-action lawsuits are often launched by ambulance-chasing law firms looking for easy money or cheap publicity. Perhaps, but with higher food prices and Canada's inability to forcefully monitor food retail prices, these allegations are likely going to make a valuable point.

Canada is really data poor compared to the United States. Statistics Canada doesn't really report small details about what is going on with all food categories. Many even believe that food inflation is underestimated in Canada since Statistics Canada relies on only a few grocers to measure food inflation.

With strong data, American institutions can and will use the stick. In Canada, we pursue companies in hopes they will blink. What doesn't help either is how under-resourced the Competition Bureau is. This needs to change.

What is at the heart of it all though, is how we measure greed. When a consumer walks away from a store with a $40 steak and wilfully paid for it while many other options are offered in that store, one can argue the grocer gave choices. But with higher food prices, our inability to measure or detect greed in the system will become more obvious.

And consumer trust is at stake. We need to act before skepticism in Canada grows even further.