CFN Original: Adding new players to the bread price fixing scheme, should we be surprised?

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With the news that two national suppliers and five grocery store chains were allegedly involved with the bread price-fixing scheme that Weston Bakeries and Loblaws admitted to in December of 2017, the rest of this gigantic iceberg is slowly coming into view. And with court documents that detail the specifics of this scheme, the real question is, should we really be surprised?

If lack of surprise is one response, let’s not confuse it with any anger stemming from this debacle. As of Wednesday, Loblaws and Co., are sticking by their statement, implicating five other grocery giants and citing the issue as “industry-wide.”

And if we’re not surprised by the actions, we should be reeling from the amount of time that this scheme has been happening: 14 years to be exact. Galen Weston, CEO of Loblaws, went so far as to say that while admitting they were complicit, “you cannot price fix alone,” in order for it to work effectively. While the actions might not be surprising, the way in which price fixing has become normalized—with even the title “7/10 convention” being given to the fee structuring within this case—is disturbing, to say the least.

You might be asking, “How does this relate to fraud?” which is a great question. Under Canadian law, price-fixing schemes are considered consumer fraud and are notoriously hard to prove because price fixing can closely resemble healthy competition among market players. One example often brought up is that of gas stations: when station A moves their price of gas up or down, station B will often follow suit. This can often be simply moving in line with competitive pricing, but if an agreement between parties is made to hold the same price, the two gas stations have essentially manipulated the market illegally.

But because price fixing is so hard to prove, legal teams often look for a confession to be made in exchange for immunity for the first party to come forward, à la Loblaws. Typically the next party to admit price fixing would receive leniency in court but still face penalties. In Canada, price fixing carries a maximum fine of 24 million dollars and up to 14 years in prison.

Recent cases of price fixing that we know of include Hershey’s pleading guilty to price fixing in 2013 and paying a four million dollar fine. Also in 2015 prosecutors were forced to drop their price-fixing case against Nestlé after “no reasonable prospect of conviction,” could be found.

So what’s next? If any of the various media reports are correct, we could be looking at possible indictments, but as of February first, that’s still complete conjecture. But what this does unequivocally say from a consumer perspective, is that we need to be more diligent than ever in how and where we shop. Of course, It’s wildly unrealistic to think that voting with your wallet will fix such a wholesale problem because come on, it’s bread (and everyone loves it).

What do I mean by diligence then, if not by voting with your wallet? Well, this issue specifically gives consumers leverage in asking more questions with actual salient answers being given about the food we eat. Not too long ago, it was virtually impossible to demand any sort of transparency from our supermarket giants. But with the steady rise in consumer awareness, thanks in part to grassroots movements and the breadth of video content on food production, the time is ripe for a change in the consumer mindset: from apathy to justified anger manifesting itself in action.

With the Canadian competition bureau alleging that Giant Tiger, Metro, Walmart, Loblaws and Sobeys Inc. as the five retailers who met with Canada Bread Company Ltd and George Weston Ltd, the implications are that the competition act has been violated. In this case, the competition bureau believes that for more than a decade, the price of bread in tandem was typically raised seven cents per application.

I think one of the most interesting comments to come of this situation so far, is from a CBC article where Sylvain Charlebois, professor of food distribution and policy at Dalhousie University, said: “Two months ago, if you would have asked me if there was any collusion in the industry, I would say likely not.

“Now, I’m asking myself where else in the grocery store is there collusion other than bread. That’s the real question, I think. And so the Competition Bureau has to look at this case very seriously, beyond bread,” Charlebois said.

When we have more information about this case we’ll update this story accordingly.