Canada Bread says Maple Leaf used it as ‘shield’ in bread price-fixing case

Canada Bread is accusing Maple Leaf Foods of using it as a “shield” to avoid liability in the alleged bread price-fixing scheme that’s the subject of two class-action lawsuits and an ongoing Competition Bureau investigation.

In filings in an Ontario court as part of one of the class action cases, Canada Bread alleges Maple Leaf broke the law and breached its management agreements.

Maple Leaf was the controlling shareholder of Canada Bread up until Grupo Bimbo bought the company in 2014.

Canada Bread is so far the only company to be fined by the Competition Bureau in relation to the alleged scheme, taking a $50-million hit in 2023 after pleading guilty to four counts of price-fixing bread products under the Competition Act.

Canada Bread admitted to arranging with Weston Foods, then a George Weston subsidiary, to increase prices on a variety of packaged bread products, resulting in two price increases.

Canada Bread has previously denied participating in a “lengthy, wide-ranging conspiracy” to fix the price of bread, and instead said any anticompetitive behaviour it participated in was at the direction and to the benefit of Maple Leaf Foods.

At the time, Maple Leaf Foods said allegations of improper pricing conduct at Canada Bread while under Maple Leaf’s control were “totally unfounded.”

Now, Canada Bread alleges Maple Leaf is liable for any damages it has sustained or will sustain from the Competition Bureau investigation and the lawsuits.

Maple Leaf senior vice-president and general counsel Suzanne Hathaway said the company rejects all of Canada Bread’s claims.

“Maple Leaf Foods acted appropriately at all times, including with respect to making full, plain and true disclosure to Grupo Bimbo at the time of its acquisition of Canada Bread,” Hathaway said in a statement.

“We will continue to vigorously defend ourselves against these unfounded claims.”

In 2021, the court certified the class-action lawsuit but did not certify it against Maple Leaf Foods, Hathaway noted in her statement.

The plaintiffs in the lawsuit are currently seeking to add Maple Leaf to the list of defendants in the case, arguing Canada Bread’s guilty plea and filings in the class action implicate its former owner. Maple Leaf is contesting the plaintiffs’ request.

In its amended statement of defence and crossclaim filed Thursday, Canada Bread said Maple Leaf selected and appointed the members of Canada Bread’s board, installed one of its senior officers to run the company, and agreed to provide legal and compliance services. Therefore, Canada Bread argued that Maple Leaf knew or ought to have known of any anticompetitive conduct, making it “vicariously and contractually liable.”

In June 2023, Maple Leaf told The Canadian Press that it was not aware of any wrongdoing by Canada Bread or its senior leadership during the time it was a shareholder.

“We have acted ethically and lawfully at all times. We are not aware of and have never engaged in inappropriate or anticompetitive activity, and we will defend ourselves vigorously against any allegation to the contrary,” Maple Leaf said at the time.

In July, Loblaw Cos. Ltd. and George Weston Ltd. said they had agreed to pay $500 million to settle the two class-action lawsuits — in Ontario and Quebec — regarding the alleged bread price-fixing scheme.

The Ontario class action lawsuit is on behalf of all Canadian residents who bought bread after Nov. 1, 2001, except for Quebec residents. It was brought against a group of companies that includes Loblaw and George Weston, Metro, Walmart Canada, Giant Tiger and Sobeys and its owner Empire Co. Ltd.

Metro has denied being involved in bread price-fixing, accusing Loblaw and George Weston of conspiring to spread the blame across the industry, something Loblaw has denied.

Sobeys and Giant Tiger have also said they were falsely implicated. Walmart Canada has also denied participating in the alleged conspiracy.

The Competition Bureau began investigating alleged bread price-fixing in 2016 after Weston Foods and Loblaw, subsidiaries of George Weston at the time, admitted they participated in an “industry-wide price-fixing arrangement” and received immunity from prosecution in exchange for co-operation.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:MFI)

Rosa Saba, The Canadian Press