Food Chains Accused Of Fixing Meat Prices “To Increase Profits”

Major food chains, including Metro and Loblaw, are facing serious allegations of illegally manipulating meat prices, potentially resulting in billions of dollars in excess payments by households. The request for collective action, filed with the Superior Court of Quebec by LPC Avocat and Renno Vathilakis, accuses these companies of deliberately violating price-setting laws to amass substantial profits.

Alongside Metro and Loblaw, other companies like Walmart, George Weston, and Aliments Maple Leaf have also been singled out in this legal action. However, it’s important to note that these allegations are strongly contested by some of the companies involved, and the court will need to decide whether to proceed with the case.

LPC Avocat and Renno Vathilakis are also involved in a separate request for collective action concerning bread tariffs.

At the heart of the request is an email dated March 2007, where former Maple Leaf President Michael McCain discusses profit-boosting strategies with Paul Del Duca, the then Senior Vice-President at Metro in Ontario.

“One of the topics discussed was strategies to increase profits in various categories,” writes McCain, according to La Presse’s report translated to English. “In accordance with the position he adopted during the last increase in the price of bread, his point of view (and this is a very vigorous point of view) is that this is an acceptable strategy and that they align with it, even in our meat categories.”

The email, discovered during the Competition Bureau of Canada’s investigation into the bakery industry, has raised concerns and sparked the legal action.

The complainants believe that the email implies collusion in the meat industry similar to the bread price manipulation scheme. However, specific details about the categories of meat affected by the alleged collusion have not been disclosed at this stage of the proceedings.

While it is still early to determine the compensation sought by the complainants, they are aiming to seek redress for all individuals and entities that purchased meat products, such as beef, chicken, and pork, from the companies involved.

It’s worth noting that this request for collective action is separate from the ongoing Bureau inquiry into the price of bread. Last month, Canada Bread was fined $50 million in connection with the bread price-fixing investigation, while George Weston and Loblaw were granted immunity from criminal prosecution in exchange for their cooperation.

Upon discovering the email from 2007, experts, including Pascal Thériault, an agronomist and economist at McGill University, expressed astonishment at the audacity of such communications.

Representatives of Loblaw, George Weston, and Maple Leaf have refuted the allegations, considering the request as unfounded opportunism. They insist that the matter should be addressed in court, where they will demonstrate their position against any such behavior.

Loblaw recently reported a 31% jump in profit in its Q2 2023 financials amid an economic environment of rising food inflation.

Metro has denied participating in any price manipulation or violating the Competition Act, vowing to defend itself against the allegations.

At this point, it is unclear how much compensation the complainants will seek, but based on a previous case related to bread pricing, households could be seeking reimbursement ranging from $4.3 billion to $4.9 billion.

Information for this story was found via La Presse and sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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