Senior officers at Canada's two largest bakery wholesalers communicated directly to raise prices in lockstep, then met with five retailers, who accepted the hike on condition their competitors would as well, the federal competition watchdog alleges in court documents released Wednesday.
The Competition Bureau believes wholesalers Canada Bread Company Ltd. and George Weston Ltd., as well as grocers Loblaw Companies Ltd., Walmart Canada Corp., Sobeys Inc., Metro Inc. and Giant Tiger Stores Ltd. committed indictable offences under the Competition Act, according to the previously sealed information to obtain documents.
Canada Bread and George Weston's senior officers agreed to boost baked good prices in tandem, typically by seven cents, for more than a decade starting in 2001, the documents allege. The companies not only increased the price of bread, but also on other baked goods like buns, bagels, naan, English muffins and tortillas, it said.
The suppliers then allegedly met individually with their retail customers to get their approval for the price hike.
The retailers agreed to the boost on the condition their competitors would as well to maintain a fixed price in the market.
"Further, the retailers demanded that the suppliers actively manage retail competition by co-ordinating retail prices for their respective fresh commercial bread products and ensuring pricing alignment amongst the retailers," the documents read.
The pattern became colloquially known as the 7/10 convention, according to the documents — with a usual seven cent price increase at wholesale and 10 cent price bump for the consumer in stores.
Allegations taken seriously
In December, Loblaw and George Weston admitted they sparked the investigation when they approached the watchdog after becoming aware of an allegedly industry-wide arrangement to co-ordinate retail and wholesale prices of some packaged bread products from late 2001 to March 2015.
The two companies received immunity in exchange for their co-operation. The remaining five companies have previously said they're co-operating with the investigation, and some have outright denied any wrongdoing.
Loblaw spokesman Kevin Groh said Wednesday the documents are "unequivocal."
"We have admitted our role, and you cannot price fix alone," he said, adding the company stands by its previous statements and the actions it has taken.
Canada Bread issued a statement shortly after the documents were released saying it first learned of the claims in December but was not allowed to discuss them until the information was made public.
It noted that the George Weston and Loblaw informants admitted to inappropriate conduct and accused "certain former Canada Bread executives" dating back to 2001 "while Canada Bread was under previous ownership."
Maple Leaf Foods sold its majority share in Canada Bread to Mexico's Grupo Bimbo in 2014.
"The allegations do not reflect the Canada Bread we know," the company said Wednesday.
"Our current leadership takes these allegations very seriously and are actively investigating to take the necessary measures."
Metro Inc. said Wednesday that there is nothing in the documents that indicate the company broke competition laws. It added that after the Competition Bureau executed warrants at its offices on Oct. 31, the company launched an internal investigation.
"Based on the information processed to date, we have found no evidence that Metro has violated the Competition Act."
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