Loblaws is the biggest grocery chain in Canada, with several subsidiary chains. In Dec they admitted to fixing the price of bread for years and claimed it was an industry-wide scheme.

Loblaws is the biggest grocery chain in Canada, with several subsidiary chains. In Dec they admitted to fixing the price of bread for years and claimed it was an industry-wide scheme.
Photo Credit: via cbc

Huge grocery chain admits price fixing

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Bread prices “fixed” for 14 years

It was a rather stunning admission: the head of Canada’s largest grocery chain and baking operation admitted they’d been “fixing” the price of bread since 2002.

Galen Weston, chairman and CEO of George Weston Ltd, parent of Loblaw grocery chain and Weston Bakeries, made the announcement last year

Sylvain Charlebois is Dean in the Faculty of Management and a professor in Food Distribution and Policy at Dalhousie University in Halifax, Nova Scotia.

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Sylvain Charlebois (PhD) Dean, faculty of Management and professor Dalhousie University, Nova Scotia
Sylvain Charlebois (PhD) Dean, faculty of Management and professor Dalhousie University, Nova Scotia © Dalhousie U

In making the announcement, he also said they would offer a $25 gift card to any Canadian consumer to make amends for the price fixing.

Loblaw also operates the No Frills grocery chain, T&T Supermarkets (ethnic Asian), Shoppers Drug Mart (also sells bread), Fortinos and others.

Charlebois says it’s better for the company to go public with it guilt than have the information coming from other sources, as they then can control the message to a larger extent.

George Weston Ltd. and Loblaw also had little to lose in one sense as they are cooperating with the Competition Bureau under its “immunity and leniency” programme meaning they won’t face criminal charges in exchange for providing information against others allegedly involved in the cartel.

They could have faced fines of up to $10 million and jail time for those responsible.

In October 2017, the Competition Bureau raided the offices of certain companies in a criminal probe tied to alleged price fixing of some packaged bread products. George Weston and Loblaw said Tuesday they became aware of an arrangement involving the co-ordination of retail and wholesale prices of some packaged breads from late 2001 to March 2015.Georfe Weston Ltd is the parent of Canada’s largest grocery operation and one of the two major bread makers.
In October 2017, the Competition Bureau raided the offices of certain companies in a criminal probe tied to alleged price fixing of some packaged bread products. George Weston and Loblaw said Tuesday they became aware of an arrangement involving the co-ordination of retail and wholesale prices of some packaged breads from late 2001 to March 2015.Georfe Weston Ltd is the parent of Canada’s largest grocery operation and one of the two major bread makers. © Doug Ives/CP

While there is some confusion about whether the $25 gift certificate will or can be deducted from any class action settlement, Charlebois also says the tactic by the grocer and bread maker have been successful in diverting the discussion from the larger issue of price fixing in the industry.

RCI: Oct 17/17: Loblaws lay-offs and new hires

Charlebois notes that it’s also a good marketing ploy as people will almost certainly spend more in the stores once they begin to reclaim the gift certificates.

Canada Bread, the other major bread-maker, and large grocery chains like Sobeys, and Metro say they are cooperating with the investigation but also say they are unaware of any involvement by them.  Sobey’s has said that Weston’s allegations of industry-wide price fixing is “reckless” and hinting at legal action against the grocer and breadmaker.

An interior shot of the flagship Loblaws store at the refurbished Maple Leaf Gardens site in downtown Toronto. Loblaws plans to refurbish at least 100 stores as part of a $1.2-billion investment. Loblaws estimates its 25$ gift card will cost it between $75-150 million
An interior shot of the flagship Loblaws store at the refurbished Maple Leaf Gardens site in downtown Toronto. Loblaws plans to refurbish at least 100 stores as part of a $1.2-billion investment. Loblaws estimates its 25$ gift card will cost it between $75-150 million © courtesy Lisa Ng via CBC

Loblaw is estimating the $25 cards will cost it between $75-150 million.

Charlebois says however, because the price-fixing went on for 14 years before it came to light, this issue about bread raises other questions of what other products might be involved in price fixing.

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