Today, Loblaw and its parent company, George Weston Ltd., said they had agreed to pay $500 million to settle two class-action lawsuits dating back more than a decade to the "bread price fixing" scandal.
The class actions are against the grocery companies Loblaw and Weston, Metro, Walmart, Giant Tiger, Sobeys, and bakery supplier Canada Bread Co. The plaintiffs were Canada consumers who purchased packaged bread after 1 November 2001 on the grounds that the suppliers had conspired to manipulate the price of packaged bread in Canada.
The most expensive antitrust settlement in Canada
George Weston said it would pay $247.5 million for the settlement, while Loblaw would pay $252.5 million, including $156.5 million in cash and $96 million in points previously paid to customers through loyalty cards.
Plaintiffs' lawyers said the payment, once approved by the court, would be the largest antitrust settlement in Canada's history.
Loblaw president and chief executive Per Bank said the move was aimed at trying to "win back the trust of Canadans" and "keep them shopping here."
Details of how to receive this compensation are still being worked out. The biggest possibility is to send out a large number of checks, and the exact amount of each one depends on how many people come to register.
The 2001 bread price monopoly case
The plaintiffs allege that the companies were involved in 14 years of industry-wide price manipulation between 2001 and 2015, which led to an artificial increase in the price of packaged bread.
Competition Canada began investigating alleged bread price manipulation in January 2016. At the time, Loblaw and George Weston Ltd. admitted to participating in price manipulation and were granted immunity from prosecution in exchange for their cooperation.
In 2018 court filings, the bureau said the price of a loaf of bread had been inflated by at least $1.5 during a 16-year collusion.
In June 2023, bakery supplier Canada Bread Co. was fined $50 million for pleading guilty to breaches of four Competition Laws. The Competition Bureau said it was the highest price-fixing fine ever imposed by a Canada court.
Last October, Canada Bread Co. denied involvement in a conspiracy to manipulate the price of bread in an Ontario class action filing and denied profiting from it.
Late last year, Metro filed a defense and counterclaim statement in the Ontario Superior Court, alleging that Loblaw and George Weston conspired to implicate a competitor.
Metro has denied involvement in bread price manipulation and accused the companies of trying to shift the blame to the industry as a whole. Sobeys and Giant Tiger have also denied the allegations, claiming to have been falsely accused.
Simon Bessette, a senior competition law officer at the Competition Bureau, has explained to the public the industry inside story behind the price increases, "there is always a negotiation process going back and forth between the four retailers, and the suppliers try to coordinate it because someone has to be the first to take action" and "Canada Bread Co. is the pricing leader and Weston is the follower".
Clearly, for consumers, the fight against monopoly is not over. Attorneys for the plaintiffs in the class action lawsuit have indicated that their focus will shift to the class action lawsuit against Canada Bread, Sobeys, Metro, Walmart Canada and Giant Tiger.
Consumers are "soft-spoken" in the revolt
As the largest supermarket chain in Canada, Loblaw has always had a say in prices, especially in the high inflation environment, which has angered many Dick Silk consumers.
Previously, some Canada consumers gathered on Reddit to boycott Loblaws and its brands in May. Participants hope to put pressure on the Grocery Code of Conduct through protests, which have seen "grocers' commitment to prices and price caps on basic goods."
However, there was a lot of speculation from marketing experts at the time that it might not be effective. Before the boycott began, Nicholas Li, an assistant professor in the Department of Economics at the University of Toronto, said that Loblaw's past performance, such as in the fight against PepsiCo/Frito-Lay, "would rather argue with suppliers and leave their shelves empty than compromise for money, so I think a boycott like this ...... Unlikely to make them change their minds".
Today, Loblaw reported second-quarter earnings that included May. During the call, Loblaw CEO Per Bank said the overall financial impact of the boycott movement was "minor."
However, the company failed to meet analysts' expectations for revenue for the quarter, with same-store food sales up just 0.2%.
The company attributed the lower-than-expected sales in part to strong growth in the year-ago quarter, when same-store food sales increased 6.2%.
From the perspective of consumption of specific products, compared with the cooling and rainy weather brought about by the consumption suppression this spring, the "extreme heat" in May drove the company's outdoor and horticultural divisions to sell well; The main sectors that contributed to the decline in sales were food and household goods, as well as the exit of some low-margin electronics.