Loblaw Companies (TSX: L) and its parent company George Weston (TSX: WN) have agreed to a $500 million settlement over their involvement in a long-standing bread price-fixing conspiracy. This settlement is part of a class-action lawsuit that also includes other major Canadian retailers such as Metro, Walmart Canada, Giant Tiger, and Sobeys.
George Weston will contribute $247.5 million in cash, while Loblaw will pay $252.5 million, comprising $156.5 million in cash and $96 million in credits previously distributed to customers via the Loblaw Card program. The settlement awaits court approval, which, if granted, would mark the largest antitrust payout in Canadian history.
Galen Weston, chair and CEO of both Loblaw and George Weston, expressed regret over the scandal. “This behaviour should never have happened,” Weston said. “We have the privilege of serving Canadians from coast to coast. That privilege needs to be earned each and every day. Reaching a settlement on this matter was the right thing to do in response to previous behaviour that did not meet our values and ethical standards.”
Jay Strosberg, managing partner of Strosberg Sasso Sutts LLP, representing the plaintiffs, highlighted the significance of the settlement. “This is a significant milestone in Canadian class action history and sends a strong message that conduct that harms consumers will not be tolerated,” Strosberg stated.
The Competition Bureau began investigating the alleged price-fixing in January 2016. Loblaw and Weston Foods, subsidiaries of George Weston at the time, had previously admitted to participating in the “industry-wide price-fixing arrangement” and received immunity from prosecution in exchange for their cooperation. The Bureau estimated that the conspiracy added at least $1.50 to the price of a loaf of bread during its 14-year duration.
The price-fixing scheme, which spanned from 2001 to 2015, was unearthed by Loblaw and George Weston themselves in 2015. The companies reported their findings to the Competition Bureau, which later facilitated the settlement negotiations.
In June 2023, Canada Bread was fined $50 million after admitting to four counts of bread price-fixing under the Competition Act. This fine was the highest ever imposed by a Canadian court for price-fixing.
Despite the settlements, other implicated companies continue to deny involvement. Metro, in its defense, accused Loblaw and George Weston of attempting to implicate them falsely. Similarly, Sobeys and Walmart Canada have denied any wrongdoing or participation in price-fixing activities. Giant Tiger has also maintained its innocence, stating that it was neither involved in nor aware of any conspiracy.
The focus of the legal teams representing the plaintiffs will now shift to preparing for trials against the remaining defendants: Canada Bread, Sobeys, Metro, Walmart Canada, and Giant Tiger. These trials will further explore the extent and impact of the alleged industry-wide conspiracy.
Information for this briefing was found via CBC and the 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.
Ontario Opening Doors to Video Based Telemedicine and Digital Practices
In a news release earlier this month from the Province of Ontario, an announcement slid...