Canada Bread owner sues Maple Leaf over alleged bread price-fixing

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This article was published 29/11/2024 (658 days ago), so information in it may no longer be current.

Canada Bread owner Grupo Bimbo is suing Maple Leaf Foods for more than $2 billion, saying it lied about the company’s involvement in an alleged bread price-fixing conspiracy.

The filing comes a week after a lawsuit against the Mexico-based Grupo Bimbo from Maple Leaf, which was Canada Bread’s controlling shareholder until 2014.

Canada Bread has claimed Maple Leaf used it as a “shield” to avoid liability in the alleged scheme.

The alleged price-fixing conspiracy is also the subject of two class-action lawsuits and an ongoing Competition Bureau investigation.

Canada Bread is the only company that’s been finedin the Competition Bureau’s investigation. The company pleaded guilty to four counts of price-fixing in 2023 and was fined $50 million. However, it has denied taking part in a “lengthy, wide-ranging conspiracy.”

Grupo Bimbo’s suit argues that Maple Leaf caused Canada Bread to engage in the alleged conspiracy and deliberately withheld knowledge of it from Grupo Bimbo during the sales process.

Meanwhile, Maple Leaf is suing Grupo Bimbo and Canada Bread for defamation, saying allegations that the company was aware of or played a role in the alleged conspiracy are unfounded.

None of the claims have been tested in court, and both companies deny each other’s accusations.

“To say we will defend against this frivolous action vigorously, would be a colossal understatement,” said Maple Leaf executive chairman Michael McCain in a statement, calling the lawsuit meritless.

McCain, formerly the chief executive at the company, is named as a defendant in Grupo Bimbo’s lawsuit.

“Maple Leaf Foods and its officers acted appropriately at all times, including with respect to making full, plain and true disclosure to Grupo Bimbo at the time of its acquisition of Canada Bread,” he said.

Mexico-based Grupo Bimbo said in the statement of claim that it bought all the outstanding shares of Canada Bread in 2014 for about $1.83 billion. The acquisition price, it said, was predicated on Maple Leaf’s allegedly false representations that Canada Bread was in compliance with applicable laws and had made the appropriate disclosures about its business.

Grupo Bimbo claims that Canada Bread participated in the alleged price-fixing conspiracy at the direction of Maple Leaf, which “was itself a participant and a profiteer of the conspiracies.”

Canada Bread has said that any anticompetitive behaviour it participated in was at the direction of and to the benefit of Maple Leaf.

Maple Leaf said in its defamation lawsuit that there is no merit to the allegations the bureau has made against Canada Bread concerning an alleged conspiracy.

The Competition Bureau’s investigation began in 2016. It has alleged that at least $1.50 was added to the price of a loaf of bread over 16 years.

Canada Bread, along with the major grocers and other companies, is a defendant in both class-action lawsuits, though Loblaw and George Weston — which received immunity from prosecution after admitting to participating in an “industry-wide price-fixing arrangement” — recently settled both suits for a combined $500 million.

The other companies implicated in the ongoing lawsuits have denied participating in the alleged bread price-fixing scheme.

This report by The Canadian Press was first published Nov. 29, 2024.

Companies in this story: (TSX:MFI)