A worker restocks shelves in the bakery and bread aisle at an Atlantic Superstore grocery in Halifax, on Jan. 28, 2022.Kelly Clark/The Canadian Press
The Competition Bureau believed Maple Leaf Foods’ former chief executive, Michael McCain, was aware of alleged arrangements to fix bread prices, according to a 2019 court document.
Canada Bread, which was controlled by Maple Leaf until 2014, agreed last week to pay a record $50-million fine as part of the federal watchdog’s long-running investigation into bread price-fixing. Maple Leaf has issued a statement denying any wrongdoing in the matter.
Maple Leaf Foods MFI-T, as well as some of Canada’s largest grocers, are still under investigation by the Competition Bureau after the guilty plea by Canada Bread. Mexican company Grupo Bimbo GRBMF bought Canada Bread in 2014 and said last week that it had no knowledge of any price-fixing arrangements at the time of the acquisition.
In a sworn statement as part of a 2019 search-warrant application, a representative for the Competition Bureau said that its investigators “discovered evidence that at least one senior executive within the Maple Leaf Foods organization, namely Michael McCain, had knowledge of the anti-competitive conduct that is the subject of the Commissioner’s inquiry.”
The existence of the court document was previously reported by the Tyee and the Toronto Star.
A court document screenshot of an email from March of 2007, in which Mr. McCain wrote that he 'had a wide ranging conversation' with Paul del Duca, who was employed by grocer Metro Inc. Mr. McCain was CEO of Maple Leaf in 2007, and retired from the role this year. 'One of the topics that we discussed vigorously was the strategy of managing category profit up in the retail environment,' Mr. McCain wrote in the email, which was sent from the account of his then-executive assistant Sue Perkins.Supplied
“We have a culture that demands we act with absolute integrity and we would never act unlawfully and were absolutely not part of any coordinated effort to set the price of bread,” Mr. McCain wrote in a statement provided Monday to The Globe and Mail.
The court document includes a screenshot of an e-mail from March, 2007, in which Mr. McCain wrote hat he “had a wide ranging conversation” with Paul del Duca, who was employed by grocer Metro Inc. MRU-T Mr. McCain was CEO of Maple Leaf in 2007, and retired from the role this year.
“One of the topics that we discussed vigorously was the strategy of managing category profit up in the retail environment,” Mr. McCain wrote in the e-mail, which was sent from the account of his executive assistant at the time, Sue Perkins.
“Consistent with the position that he took on the last bread price increase, his point of view (and it is a very vigorous point of view) is that this is an acceptable strategy and they are aligned with it even in our meat categories.”
In price-fixing case, $50-million fine on Grupo Bimbo’s Canada Bread was a hollow victory
In Monday’s statement, Mr. McCain wrote that his discussion with Mr. del Duca was part of the normal course of doing business.
“This email reflects a routine discussion between a supplier and a customer. I have been selling food to retailers for 45 years in many thousands of individual sales calls, and most of these conversations include product, pricing, and category management because that is our job as a supplier,” Mr. McCain said. “All consumer packaged goods suppliers engage in these discussions.”
“Metro denies that it or any of its employees participated in a price-fixing conspiracy or violated the Competition Act and will not comment further,” spokesperson Stephanie Bonk wrote in an e-mailed statement.
A statement provided by Maple Leaf and not attributed to Mr. McCain described conversations between retailers and their suppliers as “a universal business practice across the consumer-packaged goods industry,” a practice known as “category management” that includes negotiations between parties to maximize sales and profitability of product categories.
“Neither Maple Leaf Foods nor Michael McCain were aware of or involved in any effort to coordinate the price of bread, because to our knowledge no such effort took place,” the statement said. “We categorically reject the suggestion by anyone that this email is any indication of Michael McCain having awareness of or involvement in anything improper.”
Maple Leaf’s position stands in stark contrast to the Competition Bureau’s 2019 court filing, which outlines communications between industry players aimed at co-operatively setting the price of bread.
The document includes allegations that Canada Bread and Weston Bakeries, which are competing suppliers, “agreed to increase their respective wholesale prices for the sale or supply of fresh commercial bread via direct communications between senior officers in their respective organizations.”
The document also alleges that those suppliers met with retailers – who buy their products at a wholesale price to resell to shoppers – “to obtain their acceptance of the fixed price, thereby fixing the retail price for the sale or supply of fresh commercial bread.” That process is known as “socialization” of price increases within the industry, according to the document.
This conduct is alleged to have continued from 2001 until 2015 when Loblaw Cos. Ltd. L-T and its parent company, George Weston Ltd., tipped off the federal watchdog, agreeing to co-operate in exchange for immunity from criminal charges.
However, the document also says the Competition Bureau believes the activity continued until 2017, when its investigation became public.
Other companies still under investigation include Metro Inc., Sobeys Inc. EMP-A-T, Walmart Canada Corp. and Giant Tiger Stores Ltd. Representatives for all those companies have denied any violation of competition law.
As part of its investigation, the Competition Bureau executed a number of search warrants from 2017 to 2019. The 2019 court document was sworn by Simon Bessette, a senior competition law officer with the bureau, and sought two additional search warrants.
Last week’s statement of agreed facts described conversations between one or more executives at Weston Foods and the CEO of Canada Bread, who was also a “former senior officer” at Maple Leaf. The statement did not name the “former senior officer.” Richard Lan was named CEO of Canada Bread in 2002, and also served as chief operating officer at Maple Leaf for many years. He left Canada Bread shortly after Grupo Bimbo’s 2014 acquisition. Mr. Lan is listed as one of the recipients on the e-mail sent by Mr. McCain in 2007.
The 2019 document outlines at least 15 separate occasions when wholesale and retail price increases occurred during the time of the alleged price-fixing arrangements.
With a report from Bill Curry in Ottawa.