The substantial fine of $50-million announced for Canada Bread Co. Ltd., currently owned by Mexico-based Grupo Bimbo, was the highest penalty ever imposed in Canada for price-fixing.Graeme Roy/The Canadian Press
Sylvain Charlebois is a professor of food distribution and policy and the director of the Agri-Food Analytics Lab at Dalhousie University, and co-host of The Food Professor Podcast.
While the blame for inflated food prices in recent months has been unjustifiably directed at grocers and the food industry, the story is different for the bread-fixing scandal, for which a long-awaited development came on Wednesday.
Food inflation is a global phenomenon that affects the entire food ecosystem. However, the Canadian food industry exhibits a culture that inherently justifies collusive thinking and illegal price co-ordination.
The food industry has seemingly evaded accountability for these practices for a considerable time. The investigation of price-fixing in the bread market was initiated by the Competition Bureau in 2015, and eight years later, the results seem paltry.
The substantial fine of $50-million announced for Canada Bread Co. Ltd. on Wednesday, currently owned by Mexico-based Grupo Bimbo BMBOY, was the highest penalty ever imposed in Canada for price-fixing. But it was also a hollow victory that serves as a reminder to all Canadians that the Competition Bureau still has unresolved matters.
Previously, Loblaw Cos. Ltd. L-T, together with Weston Bakeries, confessed their involvement in the bread scandal, with grocery chain Loblaws extending an apology to all Canadians in the form of a $25 gift card. That was in 2017. Since then, no significant developments have transpired until Wednesday.
Beyond confessions like those of Grupo Bimbo and Loblaw, investigations by the Competition Bureau appear to have yielded no significant outcomes.
One can question why it did take almost six years after Loblaw’s admission before the Mexican group made a decision to admit guilt. But late is better than never.
Indeed, it is ironic that it is a Mexican-owned company that has now acknowledged the responsibility of rectifying the misconduct within Canada’s food industry. Maple Leaf Foods, which sold Canada Bread to Grupo Bimbo in 2014, continues to deny any responsibility, and Grupo Bimbo is contemplating various legal actions against it.
Bread price-fixing scandal reveals rift between Canada’s big grocers
According to the Competition Bureau, the investigation is continuing, contributing to a burdensome and perplexing journey for Canadians. Four major grocers, namely Walmart, Sobeys, Metro and Giant Tiger, have consistently denied any involvement in the scandal.
In essence, Grupo Bimbo is commendably taking appropriate measures. As a non-grocer, it lacked the ability to provide gift cards, as Loblaws did. The bread scheme is estimated to have cost each Canadian family an excess of $371.80 between 2001 and 2015.
It is imperative to emphasize the timing of Canada Bread’s admission, which coincides with a significant surge in bread prices. In fact, bakery products, including produce, are currently major contributors to the escalation of food inflation in Canada.
Certain bakery items such as pita and flatbread have experienced a remarkable 24-per-cent increase compared with the previous year, representing one of the most substantial hikes in that category observed in the past 12 months.
Consequently, Canadians are justified in questioning whether there may be ulterior motives at play with Grupo Bimbo’s admission. With the Competition Bureau having achieved so little in so long, lingering doubts are bound to endure as an indelible consequence of the bread story.