Loblaw Companies and parent company George Weston Limited have admitted to participating in “industry-wide” price-fixing of bread for 14 years, dating from 2001 to March of 2015.
“Under the arrangement, the participants regularly increased prices on a coordinated basis. The participants included Loblaw and the Weston Bakeries division of George Weston as well as other major grocery retailers and another bread wholesaler, some of which have acknowledged being searched by the Competition Bureau as part of its ongoing investigation,” the companies said in a news release on Tuesday.
The Competition Bureau launched an investigation into bread price-fixing in late October.
“This sort of behaviour is wrong and has no place in our business or Canada’s grocery industry,” said Galen G. Weston, Chairman and Chief Executive Officer of Loblaw Co. and George Weston. “This should never have happened.”
Loblaw and George Weston say they notified the Competition Bureau “upon discovering this anti-competitive behaviour” in March 2015 and they have been co-operating with the federal regulator since then. They say the were required to keep their cooperation confidential as the bureau investigated other parties.
Both companies say the employees responsible for Weston Bakeries’ and Loblaw’s role in the price-fixing are no longer employed by the companies. They say they have enhanced their compliance programs and established a new independent compliance office that reports to the boards of directors of the companies.
Loblaw is also offering customers a $25 Loblaw gift card between January 8, 2018 and May 8, 2018 (registration will take place at LoblawCard.ca.) Loblaw and George Weston expect the card offering will cost the companies between $75 and $150 million. The companies note this could be “an offset against civil liability Loblaw may face,” as class action lawsuits have been launched against the companies and other grocery retailers and suppliers.
As a result of their admission and cooperation with the Competition Bureau’s investigation, Loblaw and George Weston say they will not face criminal charges or penalties.
Retail competitor Sobeys issued a statement on Wednesday saying it does not believe that it or any of its employees violated the Competition Act, noting “any assertion of an industry-wide price-fixing arrangement has not been proven.” Sobeys says it will continue to cooperate with the Competition Bureau.
Metro and bread supplier, Canada Bread Company, a subsidiary of Mexican multinational baking company Grupo Bimbo, also acknowledged they were cooperating in the Competition Bureau investigation earlier this fall.