Bakery giant Canada Bread Co. has been fined $50 million after pleading guilty to its role in a criminal price-fixing scheme that inflated the price of bread in Canada for years.
It鈥檚 the highest price-fixing fine ever imposed by a Canadian court, the Competition Bureau of Canada said Wednesday.
The settlement is a significant milestone in the competition watchdog鈥檚 ongoing investigation into alleged bread price-fixing in Canada.
It comes as record food prices fuel consumer discontent with Canada鈥檚 food industry and fan distrust of grocers.
It also shines a spotlight on the Competition Bureau鈥檚 ongoing investigation into the role of other companies, including Metro, Sobeys, Walmart Canada, Giant Tiger, and Maple Leaf Foods.
鈥淔ixing the price of bread 鈥� a food staple of Canadian households 鈥� was a serious criminal offence,鈥� Matthew Boswell, Commissioner of Competition, said in a statement.
鈥淥ur continuing investigation remains a top priority,鈥� he said. 鈥淲e are doing everything in our power to pursue those who engage in price-fixing.鈥�
Canada Bread, now a subsidiary of Mexico-based Grupo Bimbo, pleaded guilty to four counts of price-fixing under the Competition Act.
The bread maker admitted that it arranged with its competitor, Weston Foods (Canada) Inc., to increase prices for various bagged and sliced bread products, such as sandwich bread, rolls and hotdog buns, the Competition Bureau said.
The price-fixing scheme resulted in two price increases, one in 2007 and another in 2011, it said.
At the time of the price-fixing arrangement, Canada Bread was under the ownership of Maple Leaf Foods.
Grupo Bimbo said it鈥檚 considering 鈥渁ll legal options against those responsible.鈥�
Maple Leaf Foods did not immediately respond to a request for comment.
鈥淯nder 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,鈥� Canada Bread vice-president Alice Lee said in a statement.
鈥淲e are pleased to have resolved this matter, and we look forward to building upon our investments in Canada.鈥�
Food industry expert Sylvain Charlebois pointed out that it took an international company to step up and acknowledge the wrongdoing in Canada鈥檚 food industry.
鈥淭he paradox in all of this is we needed a Mexican company to clean the Canadian food industry up,鈥� said Charlebois, a professor of food distribution and policy at Dalhousie University. 鈥淣obody in Canada wants to admit guilt.鈥�
He added: 鈥淭he investigation is not over. More questions are going to be asked and Canadians will want more answers.鈥�
The Competition Bureau began investigating alleged anti-competitive agreements between competitors to fix either the price of fresh commercial bread in January 2016.
The investigation became public in 2017 when the first search warrants were executed.
Weston Foods and Loblaw Cos. Ltd., both subsidiaries of George Weston Ltd. at the time, had previously admitted their participation in an 鈥渋ndustry-wide price-fixing arrangement鈥� involving the co-ordination of retail and wholesale bread prices.
In exchange for their co-operation, the companies received immunity from prosecution.
The Competition Bureau alleged in court documents in 2018 that at least $1.50 was artificially baked into the price of a loaf of bread during the 16-year bread-price-fixing conspiracy involving the country鈥檚 largest bakery wholesalers and grocery retailers.
Experts say the scandal has given Canadians good reason to be skeptical about the cause of high food prices in recent months, especially as grocers post significant profits.
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