Spokesperson for the Competition Bureau, Marie-France Faucher, confirmed the Ontario Superior Court in Ottawa granted search warrants “based on evidence there are reasonable grounds to believe that certain individuals and companies have engaged in activities contrary to the Competition Act.”
Canada Bread and retailers George Weston, Walmart Canada, Loblaws, Sobey’s and Metro are all being investigated.
Cartel activities
Canada's Competition Act prohibits agreements that prevent or lessen competition, or unreasonably enhance the price of a product.
Agreements between competitors to fix prices or to restrict production of a product by setting quotas could be considered cartel activities and face penalties of up to CA$10m (US$7.8m) and/or imprisonment for five years.
Competition Bureau investigators, accompanied by RCMP and local police forces raided several retailer’s offices in Toronto, Montreal and Stellarton on Tuesday.
No charges have yet been laid.
According to the Bureau’s website, price-fixing conspiracies are difficult to prove, and evidence of identical prices are not enough to prove a criminal offence.
Faucher would not reveal further details as the Bureau is required to conduct investigations confidentially.
Retailer cooperation
Numerous Canadian grocers issued statements earlier this week noting they were all co-operating fully with the investigation and taking the legal obligation very seriously.
“This process is unfolding and the companies will provide further comment when they can do so,” said Loblaw and George Weston in a joint statement.
“We are co-operating to support the investigation and have advised employees internally of the process underway,” said Sobey’s spokesperson Jacquelin Corrado.
Canada Bread said: “It has been informed it is included in an industry-wide investigation by the Competition Bureau into pricing conduct dating back to 2001. The company is co-operating fully.”
Contrary to price trends
Food market analyst Kevin Grier said recent trends in the price of bread do not seem to support a case for price-fixing.
The country’s packaged bread industry is facing challenges as consumers look for healthier and artisanal alternatives, while increased competition from discount retailers is putting pressure on prices.
According to Euromonitor International, the baked goods category in Canada is saturated and mature.
The market researcher said the traditional packaged/industrial baked goods category is facing strong competition as consumers look for products with better quality and healthier ingredients.
Euromonitor forecasts baked goods to post a CAGR of 1% between 2014 and 2019 to reach C$7.2b (US$5.6bn). Volume sales are projected to post a CAGR of 1% as well.