Breaking down the Canada Bread price-fixing scandal | About That

[Music] foreign Bread company is being hit with a record find for rigging prices over a period of years let's turn now to some breaking news from the grocery aisles and the Ontario Superior Court baked goods giant Canada Bread has agreed to pay a fine of 50 million dollars to settle the probe into its role in the infamous bread price fixing Scandal now when you hear the words bread price fixing Scandal I'm guessing you'll have one of two reactions either you will viscerally feel the Injustice that bitter reminder of everything that's wrong about giving too few companies too much control unbelievable doesn't doesn't surprise me how does that make you feel as a shopper not feel me very bad because they're taking advantage you know of the poor people or you're like what was that again because it did happen years ago starting all the way back in 2001 and it's only in 2023 all these years later we are finally seeing a resolution to the story but here's the kicker this story is just getting started and today we're going to explain why so let's start with the Canada Bread company that's actually what it's called who are they and why do they have to pay 50 million dollars a Canada Bread company owns a whole bunch of bread brands that you're probably familiar with you know dempsters is a big one but there's also Villagio Palm Benz bomate mcgavins and the accusation is this that on two specific occasions once in 2007 and again in 2011 it conspired with a competitor Western foods which you know owns Wonder Bread d'italiano country Harvest and a few others so like we're talking basically all of the big bread brands here that these two Mega bread companies conspired to artificially inflate prices cost in Canadians between 14 and 16 extra cents per item for each increase and you know that includes sandwich bread yes but but also hot dog buns English muffins tortillas so you know all that kind of stuff bagged bread Canada Bread Company pleaded guilty to price fixing now maybe at this point you're wondering doesn't it take two to tango right like what about Western Foods the company owned by the Westin family which owns loblock companies and it's grocery stores but yes they were involved but they're immune from prosecution loblanc Western bakeries admitted to the competition Bureau that they were involved in the alleged price fixing scheme so here's the thing about price fixing it can often be pretty hard to prove like in Canada it's really incumbent on guilty parties to come forward which sounds kind of crazy right because like why would a bad actor confess unless they had something to gain but that's what happened Loblaw ultimately came forward and cooperated with the competition Bureau but by fessing up it's gained immunity it won't be penalized for fixing the price of bread that's the system encourage any one bad actor to Spill the Beans rat out the others they get off and then there's a sliding scale of penalty reduction for everyone who confesses thereafter if any of the companies are charged and found guilty they could face major fines and even jail time now that's not to say Loblaw didn't suffer for its role the hits of consumer confidence was big the overall Snowball Effect is you know I'm a consumer and I'm not being taken care of and of course you know trust isn't an easy thing to rebuild Loblaw offered customers 25 gift cards but experts say that's a pretty token gesture compared to how much everybody involved would have made Stacy and Tammy are you ready yes it just seems that 25 isn't a lot great here are your 25 gift cards according to court documents unsealed in 2018 the competition Bureau says this price fixing scheme actually went on for almost 15 years from 2001 to 2015 and the allegation was that retailers were in on it they'd call it the 710 convention so for each price increase retailers would pay Seven cents more for bread wholesale and customers so people like you and me would pay 10 cents more so if you think about it that's seven cents bread maker profit three cents grocery profit and look at the price of bread over that period of time clearly out of step with food inflation the price of a loaf of bread almost doubling and you know bread would have been an easy product to collude on you know as we said earlier two companies Canada Bread company and Western Foods control the vast majority of the bagged bread Market how can it be that two Rivals you would think competitors would be working together instead of fighting for our business to keep our consumer prices as low as possible but here's the thing I said at the start this story is only just beginning because the investigation is ongoing and those retailers that I mentioned which the competition Bureau alleges were part of the scheme so you know businesses like Metro sobies Walmart Giant Tiger they say they've done nothing wrong all right Sophia Harris you are with the business unit you've been covering this story for for years how are you doing I'm good how are you good good so we're going to talk about the um the ongoing investigation in just a moment but but I do want to ask you about why with this fine we're only seeing it in relation to two like very specific instances of price fixing given like I mean the competition Bureau alleges this this went on for like a decade and a half yeah yeah well probably price fixing conspiracies are very difficult to prove you need hard evidence preferably you need people coming forward and the reason we have a break in this case now is uh not only did the competition Bureau uncover evidence of two cases of price fixing but also Canada Bread confessed so you know slam dunk case closed and there may be other incidents where Canada Bread fix the price of bread um but the competition Bureau uncovered these two cases has evidence and really that's what it has to go on for for this case and can I ask you about the the fine itself like like 50 million dollars yeah it sounds like a lot of money like especially when you weigh it against the idea that that this is the largest find Canada has ever seen right for Price facing yeah yeah except then I think about how much money these companies make even just in Bread sales yeah and you know compared to the amount of money they may have made because of price fixing and I'm wondering how should I weigh 50 million dollars well to put it in perspective um uh Canada Bread's current owner Grupo bimbo is a Mexican multinational company and it's a multi-billion dollar company so 50 million dollars for Grupo bimbo is a drop in the bucket it's basically nothing um however the company is not happy about having to pay this fine because it wasn't the owner of Canada Bread during the time with the price fixing conspiracy right those Maple Leafly Foods so even though it's only 50 million dollars a lot for us but you know probably not for Grupo bimbo it is considering seeking legal action um against those responsible not saying who they think those people are but I'm presuming it's Maple Leaf Food sure because when they when they acquired the Canada Bread company they say they didn't know anything about it correct Grupo bimbo says we were in the dark and um you know one theory about why they came forward is because they can say look this bad thing happened but it wasn't on our watch so you know we're not culpable what about the other retailers that we've been talking about so other grocery stores yeah that may have been involved like I mean if they were guilty of price fixing there would have been some kind of incentive for them to confess to come forward for a more lenient sort of penalty yeah but but they all say no we didn't do anything wrong we didn't break any laws oh well just because a company comes doesn't come forward you know doesn't mean uh um they they're innocent it could mean that they got together and said look I don't think the competition Bureau has the evidence to lay charges against us uh so let's just not say anything or you know they could all be innocent we just don't know um bad investigation is on that investigation is ongoing and you know what it could take years um you know maybe we'll see more charges um maybe companies will come forward and confess but if they don't this could go on for years and years and and I think it's worth underlining a point that I made um earlier but but let's just be clear here when it comes to the other party involved here so not Canada Bread but we're talking about Western Foods Western bakeries yeah everything that that Galen Weston Western I mean the whole family everything they touch they're immune yep total immunity yep that's just the way the system works that's the they were the first to come forward and I have to say that if they hadn't come for the competition Bureau may not have had enough evidence to launch this investigation so essentially they were the whistleblowers and because they came forward first they they get blanket immunity yeah except they did give out those 25 gift cards to try to make a mess yes there was a 25 difference yeah not the same thing as a you know a you know a charge and a court case so so the next step for you then Sophia as someone who has tracked this case for years I I assume you're you're crossing your fingers it won't be years until we see some other developers I hope not I hope not but um we you know all eyes now are on the other retailers involved uh if any of them decide to come forward or you know if the competition Bureau lays charges and then they have to go to court and defend themselves or we could see nothing happen if the competition Bureau just doesn't find the evidence it's needed and the evidence required to maybe force them to come forward you know if they have something damning and maybe we will see other Grocers come forward Sophia Harris thank you very much thank you

Channel: CBC News

Views: 115,441

Keywords: Canada bread, bread, price-fixing, bread price-fixing, bread scandal, price-fixing scandal, scandal, CBC News, about that, andrew chang, cbc, cbc news, cbc explore, exploreapp

Id: jVtk5_ZjyrA

Length: 10min 35sec (635 seconds)

Published: Thu Jun 22 2023