- Loblaw (TSX:L) and its parent company, George Weston (TSX:WN), have agreed to pay $500 million to settle a bread price-fixing class-action lawsuit
- The lawsuit was part of a broader case involving multiple companies, including Metro, Walmart Canada, Giant Tiger and Sobeys and its owner, Empire Co. Ltd.
- The plaintiffs in the lawsuit alleged that these companies engaged in a 14-year conspiracy from 2001 to 2015 to artificially inflate the price of packaged bread in Canada
- Loblaw shares opened trading at C$164.20 and George Weston opened trading at C$213.30
Loblaw (TSX:L) and its parent company, George Weston (TSX:WN), have agreed to pay $500 million to settle a bread price-fixing class-action lawsuit.
The largest antitrust settlement in Canadian history
The lawsuit was part of a broader case involving multiple companies, including Metro, Walmart Canada, Giant Tiger, Sobeys and its owner, Empire Co. Ltd.
The plaintiffs in the lawsuit alleged that these companies engaged in a 14-year conspiracy from 2001 to 2015 to artificially inflate the price of packaged bread in Canada. The suit was filed on behalf of all Canadian residents who purchased packaged bread after Nov. 1, 2001.
According to the terms of the settlement, George Weston Ltd. will pay $247.5 million in cash, while Loblaw will contribute $252.5 million, consisting of $156.5 million in cash and $96 million in credit previously distributed to customers through the Loblaw Card program.
‘We are sorry …’
“This behaviour should never have happened,” Galen Weston, chairman of Loblaw and George Weston, said in a statement. “On behalf of the Weston group of companies, we are sorry for the price-fixing behaviour we discovered and self-reported in 2015. 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.”
The settlement, which is subject to court approval, is the largest antitrust settlement in Canadian history. Jay Strosberg, managing partner of Strosberg Wingfield Sasso LLP, noted 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,” he said in a news release.
After the discovery of the price-fixing scheme in March 2015, the Loblaw and Weston companies reported the issue to the Competition Bureau and have since cooperated fully with the investigation. They also implemented significant measures to enhance compliance, including the establishment of an independent Compliance Office that oversees adherence to laws and pricing policies.
The Competition Bureau began its investigation into bread price-fixing in January 2016. Weston Foods and Loblaw, subsidiaries of George Weston at the time, had admitted their involvement in the scheme and received immunity from prosecution in exchange for their cooperation. The bureau alleged that at least C$1.50 was added to the price of a loaf of bread during the conspiracy.
A fair slice
Despite the settlement, the legal battles are not over. Lawyers for the plaintiffs are now preparing for trial against the remaining defendants, including Sobeys, Metro, Walmart Canada and Giant Tiger. These companies have denied participating in the conspiracy and have filed various statements of defense. Canada Bread was fined a record $50 million in June 2023 after the company pleaded guilty for its part in the criminal price-fixing deal.
The $500 million settlement was negotiated through mediation presided over by the Chief Justice of the Ontario Superior Court of Justice. The settlement funds will be distributed to eligible class members after court approval of the plan of distribution. Further details will be provided during the court’s approval process.
About the companies
George Weston Ltd. operates through its two reportable operating segments, Loblaw Companies Ltd. and Choice Properties Real Estate Investment Trust.
Loblaw Companies Ltd. is Canada’s largest food retailer, with more than 2,400 stores operating under 22 regional and market segment banners.
Both companies opened trading more than 1 per cent lower, Loblaw shares (TSX:L) were C$164.20 and George Weston (TSX:WN) shares were C$213.30.
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(Top image: File)