Canada Bread Co said it will pay a C$50 million fine after reaching a settlement over a price-fixing scheme dating back more than a decade.
The settlement reached in the Ontario Superior Court in Toronto follows an investigation by the Competition Bureau of Canada into packaged bread that began in 2016 over two wholesale price increases implemented by Canada Bread and Weston Foods (Canada) more than a decade ago.
According to court documents, senior executives at Weston made four pricing arrangements directly with Canada Bread’s then-CEO - who at the time was also a senior officer of parent company Maple Leaf Foods (TSX:MFI) - during 2007 and between 2010 and 2011.
These pricing arrangements resulted in the implementation of one price increase in 2007 and a second in 2011.
Canada Bread was acquired by Mexican firm Group Bimbo in 2014 and, under new leadership, it said it had cooperated with the Competition Bureau's investigation, established controls and initiatives to create a first-tier compliance program and taken the initiative to resolve the investigation.
"Under new ownership, Canada Bread is committed to being a responsible partner to our valued customers and making bread an accessible and reliable food source for Canadians,” vice president Alice Lee said in a statement.
“We are pleased to have resolved this matter, and we look forward to building upon our investments in Canada"
As part of the Competition Bureau's investigation, in 2017 Weston and Loblaw (TSX:L) Company Limited announced that they were granted immunity from prosecution in exchange for cooperation with the Competition Bureau.
The company said Grupo Bimbo is considering all legal options against those responsible for the price fixing.
Contact the author at stephen.gunnion@proactiveinvestors.com