Canadian buyers want a $50 million price fix for their slice of bread
For anti-poverty activist Irene Breckon, it makes no sense: the federal government will pocket the entire $50 million fine that Canada Bread must pay for price-fixing.
“I’m glad they’re being punished, but I really don’t want the government to have that money,” says Breckon of Elliot Lake, Ont.
“That $50 million should be distributed to the people. Food prices are still high,” she said, referring to the fact that grocery prices have risen nine percent over the past year. Bakery products are up 15 percent.
Against the backdrop of high food inflation, major bread producer Canada Bread admitted last week that it colluded to fix prices — a scheme that resulted in two wholesale increases in 2007 and 2011.
Retailers consider the wholesale price when determining how much to charge customers.
The Competition Bureau said the IOU is an important development in its more than seven-year investigation into an alleged industry-wide bread price-fixing agreement.
“[It’s a] very serious crime,” Competition Commissioner Matthew Boswell said in an interview Friday. “Bread, as we all know, is a staple of the Canadian diet.”
Nevertheless, the $50 million fine will go into the federal government’s general revenue pool. While that money will be used for government services, many Canadians want to know why it’s not going directly to them – the people who bought the overpriced bread.
“If a company does something wrong, they should give back to the people they wronged,” said customer Chris Mrkonjic for a Toronto supermarket.
But said competition law expert Jennifer Quaid the main purpose of criminal prosecution is to punish bad actors, not to pay damages.
“It’s the exception rather than the rule,” she said, adding that it would be difficult to identify the victims in a years-old bread price-fixing scheme.
“People don’t keep their receipts,” said Quaid, a law professor at the University of Ottawa. “I really don’t think it would be practical at all in this case to imagine us using the criminal justice system for this.”
Donate the money to a good cause?
CBC News heard from several people, including Alex Vanderzand, of Pickering, Ont., who suggested the $50 million could easily be donated to food banks. Some of them are struggling to keep up with the rising demand fueled by high food inflation.
“This money can help them stock their shelves and give it back to people who really need it,” Vanderzand said.
Canada Bread must pay a $50 million fine for participating in a plan to fix the price of bread in Canada for 14 years. It is the largest fine ever imposed by the Competition Bureau. Andrew Chang explains how the scheme worked and why this may be just the beginning.
CBC News uncovered several misleading marketing investigations by the Competition Bureau that required companies to make donations to designated charities as part of their settlements.
In the latest case last year, coffee maker Keurig Canada agreed to pay a $3 million fine and donate $800,000 to an environmental charity for making false or misleading claims that the single-use coffee pods can be recycled.
But the Competition Bureau said the donation requirements were part of civil cases that the bureau could settle. Because price fixing is a criminal offence, federal prosecutors negotiated the Canada Bread settlement. Canada’s Public Prosecution Service declined to comment on the agreement.
The Competition Bureau said Canadians seeking compensation can pursue civil suits. There are currently two class action lawsuits pending, one in Ontario and one in Quebec is seeking money for bread buyers from Canada Bread and other companies allegedly involved in the price-fixing scandal.
Those cases can linger in court for years.
Why $50 million?
In addition to protesting who gets the money, some Canadians have questioned why Canada Bread’s fine was not higher.
In a statement of agreed facts in the case, the company’s annual sales for fresh bakery products were $945.9 million in 2007 and $1.087 billion in 2011. Those are the same years the price fixing took place.
“A $50 million fine is not for them,” said Michelle Engert of Vancouver, who complained about the amount on Facebook shortly after the news broke.
“How can they get a tap on the wrist?” she said in an interview. “Because this is a serious criminal offense.”
Canada Bread’s fine is actually the largest price-fixing fine in Canadian legal history. In fact, Canada Bread was fined the largest possible for four price-fixing charges (a total of $70 million), but was given a 30 percent “leniency reduction” for the company’s cooperation.
However, companies caught now in price fixing may face harsher penalties because the federal government on Friday removed the fine limit ($25 million per violation since 2010) from Canada’s competition law.
“I think it’s appropriate to have a lot more flexibility in the amount,” said Quaid, the competition law expert. “It makes sense in the context of competition law, where the amount of money involved can be very large.”
The Competition Bureau is still investigating grocers Sobeys, Walmart and Giant Tiger, as well as wholesaler Maple Leaf Foods for allegedly participating in the bread price fixing which ran from 2001 to 2015.
Each of those companies has said they are ignorant of any wrongdoing.
Maple Leaf Foods was the majority shareholder of Canada Bread until it was sold to the Mexican multinational Grupo Bimbo in 2014. Grupo Bimbo says it didn’t learn about Canada Bread’s involvement in the conspiracy until 2017.
Quaid said that if other companies are found guilty of participating in the price fixing, the fines they face will still be capped, as the violations would have occurred before the cap was lifted.
