Canadian Grocers Face Class Action During Investigation of Bread Sellers

Three of Canada’s largest grocery chains are being accused of price-ornorbiixing on sliced bread in a class action lawsuit filed this week.

The consumer lawsuit follows an investigation by Canada’s Competition Bureau of alleged antitrust violations among bread retailers and suppliers.

The lawsuit was filed in Montreal Superior Court against the Metro Inc., Loblaw Companies Ltd. and its parent, George Weston Ltd., grocery companies.

Investigators also questioned executives of Walmart Canada Corp. and Sobeys Inc., which owns the Chicago-based IGA franchise of grocery stores in Canada.

Joey Zukran, the attorney who filed the lawsuit, was quoted in the Canadian media saying the class of customers could reach into millions.

“This class seeks financial compensation for the damages suffered as a result of the grocery stores’ anti-competitive and unlawful activities,” Zukran’s firm, LPC Avocat Inc., said on its website.

Zukran has not yet specified the amount of money he seeks.

Competition Bureau agents searched the offices of the three companies named in warrants this week. The Royal Canadian Mounted Police provided security for Competition Bureau investigators but are not independently investigating the charges.

“The Ontario Superior Court of Justice in Ottawa granted search warrants based on evidence that there are reasonable grounds to believe that certain individuals and companies have engaged in activities contrary to the Competition Act,” according to a Competition Bureau statement. “Bureau officers are conducting searches and are gathering evidence to determine the facts.”

No charges have been filed against the companies. A judge has not yet certified the lawsuit as a class action.

Loblaw Cos., along with George Weston Ltd., said in a statement they “are aware of an industry-wide investigation by the Competition Bureau concerning a price-fixing scheme involving certain packaged bread products.” They said they are cooperating in the investigation.

Competition Bureau officials told Canadian media outlets they were investigating possible violations of the conspiracy provision of the Competition Act.

The Act forbids agreements among businesses that “unduly” reduce competition or “unreasonably enhance” prices.

The Competition Bureau imposed fines on businesses of $13.28 million (Canadian) in 2016 and 2017.

The charges most commonly involved bid-rigging, price-fixing, restricting output and agreeing to share sales by territories.

In addition to civil fines as high as $10 million (Canadian), the charges could include criminal convictions with imprisonment of up to five years.
The class action lawsuit comes at time when intense competition among groceries is making them desperate for profits.

Discount grocers like Walmart and Costco, along with online retailers like Amazon, are cutting deeply into traditional supermarket revenue in Canada as well as the United States.

Supermarket prices fell an average of 1.3 percent last year compared with a year earlier, according to the U.S. Agriculture Department’s Economic Research Service.

Similar declines in the consumer price index for grocery products were reported in Canada.

George Weston Ltd. is one of Canada’s largest bread bakeries. Its products include the Wonder and Country Harvest bread lines.

It competes with Canada Bread Co. Ltd., which is owned by the Mexican company Grupo Bimbo. Canada Bread officials acknowledged to the media they are included in the Competition Bureau investigation.

A similar case arose last year in South Africa, where the government accused grocery stores of price-fixing on bread between the late 1990s and 2006.

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