CANADA—Grupo Bimbo-owned Canada Bread has initiated legal proceedings against Maple Leaf Foods, alleging that the latter used the bakery as a “shield” to evade responsibility in a price-fixing scandal.
The lawsuit, filed in an Ontario court, follows a C$50 million (US$36.8) fine imposed on Canada Bread after admitting guilt to multiple price-fixing counts under the Competition Act.
The controversy traces back to an investigation by the Competition Bureau of Canada, which began in 2016.
Canada Bread was found to have participated in an arrangement with Weston Foods to inflate bread prices, resulting in significant financial penalties.
“Canada Bread claims Maple Leaf used Canada Bread as a shield, causing Canada Bread to assume the liabilities of the wrongful conduct to the benefit of Maple Leaf,” the company stated in a recent announcement.
Canada Bread’s complaint asserts that Maple Leaf Foods, the controlling shareholder until 2014, failed to comply with legal standards and breached management agreements.
The bakery argues that Maple Leaf appointed directors to its board and positioned senior officers to manage operations, thereby having a direct hand in the alleged anti-competitive conduct.
“Maple Leaf represented to Canada Bread that in performing services for Canada Bread it would comply with all applicable laws,” the statement detailed.
In response, Maple Leaf Foods has categorically denied the allegations. Senior Vice President and General Counsel Suzanne Hathaway stated, “We reject these claims in their entirety,” emphasizing that Maple Leaf acted appropriately throughout the acquisition process.
She pointed out that a 2021 court ruling had already dismissed the plaintiffs’ claims against Maple Leaf, asserting that they had no valid legal basis.
“We will continue to vigorously defend ourselves against these unfounded claims,” Hathaway added.
The legal battle comes amid ongoing class-action lawsuits related to the price-fixing scandal, which also implicates other major players in the industry, including Loblaw and Weston Foods.
These companies previously admitted to participating in an “industry-wide price-fixing arrangement” and received immunity from prosecution in exchange for their cooperation with the Competition Bureau.
Canada Bread’s legal action is framed as a means to recover damages incurred from the ongoing investigations and potential liabilities stemming from the class-action lawsuits.
The company stated, “Canada Bread has brought this claim to hold Maple Leaf to account for any and all of its costs, expenses, and damages resulting from such breaches, including those related to the Competition Bureau’s investigation.”
Furthermore, Canada Bread’s filings indicate that it seeks compensation and indemnity from Maple Leaf should it be found liable in the class-action lawsuits.
The bakery insists that profits from the alleged anticompetitive behaviour primarily benefited Maple Leaf, not Canada Bread.
The case highlights the complexities of corporate accountability in the food industry, particularly in light of the significant penalties imposed by regulatory bodies.
As the Competition Bureau continues its investigation, the implications of this case could reshape the landscape for pricing practices in the Canadian bread market.
Sign up to receive our email newsletters with the latest news updates and insights from Africa and the WorldHERE.
