Bread Fixing Scheme Leads to Largest Class Action Settlement in Canadian History

Last week, Loblaw Cos. Ltd., as well as its parent company, George Weston Ltd., agreed to pay $500 million to settle a class-action lawsuit for their part in a 14-year industry-wide bread price-fixing scheme. It’s alleged that Loblaws, along with other large grocery chains such as Metro, Sobeys, Walmart Canada, and Giant Tiger, were all involved in a conspiracy to fix the price of bread between 2001 and 2015, artificially inflating the price of bread by as much as $1.50 per loaf.

Many people may be unaware that this happened in part because of the hard work of local anti-poverty activist Irene Breckon, from Elliot Lake. Her activism led to her filing a class action suit to combat the price fixing of the price of bread. This led to Weston and Loblaw last week agreeing to pay $500 million between them, with Weston paying $247.5 million, and Loblaw paying an additional $156.5 million as a follow-up to their previous $96 million for a $25 gift card program from a few years ago. The payout will be the largest antitrust settlement in Canadian history, subject to court approval.

This settlement was the result of an investigation by the Competition Bureau investigation that began in 2016. Both Weston and Loblaw admitted to participating in the price-fixing scheme, which resulted in both receiving immunity from prosecution. There will be a trial for the remaining named parties in the scheme, the previously mentioned Canada Bread, Sobeys, Metro, Walmart Canada and Giant Tiger.

Loblaw and Weston Chair Galen Weston had this to say: “This behaviour should never have happened. We have the privilege of serving Canadians from coast to coast. That privilege needs to be earned each and every day. Reaching a settlement on this matter was the right thing to do in response to previous behaviour that did not meet our values and ethical standards.” One may be forgiven for not taking these crocodile tears seriously, especially given the frankly disgusting increases in the cost of food in recent years, particularly at the largest chains like Weston’s own companies.

On this very point, Metro has denied any involvement in the price-fixing scheme and claims it was Loblaw and associated companies who were solely responsible, while implicating other grocers to improve their own market share. Sobeys has stated they have been falsely implicated, Walmart Canada has denied involvement, same with Giant Tiger. How much and to what degree these grocery giants have been involved will be determined by the courts. Canada Bread was fined $50 million last year, having plead guilty to four counts of price-fixing under the Competition Act, while simultaneously denying that they profited off price fixing. All this is to say that the lack of competition in the grocery industry has allowed this sort of blatant finger-pointing amongst a handful of large corporations about who is really to blame for ripping us off.

So what does the settlement mean for your average consumer? When Loblaws put forward their gift card program, it was open to anyone who may have purchased bread in one of their stores during the 14-year period in question. Once the courts approve the settlement, the most likely scenario would be that customers would need to contact the administrator of the funds for their own reimbursement. Much like the gift card program, it’s unlikely customers from that period still have receipts for the purchase of bread, so it’s likely they will need to sign a declaration that they did, in fact, purchase bread during the period. Any remaining amounts following disbursement may end up going to food banks or other charitable organizations. We should know more details in the coming months.

With four other corporate grocery giants yet to have their day in court, we may not know the full extent of the settlements for some time, but this debacle should stand as a stark reminder that having too little competition in a market that’s essential to everyone’s wellbeing harms us all. During that period, from 2001-2015, the price of bread rose 50 percent faster than other grocery items. When you give five companies that much concentrated power, it should come as no surprise when these corporate giants rake in profits off our back.