Canada’s biggest grocers might be colluding to fix bread prices

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Canada’s Competition Bureau, an independent law enforcement agency that monitors the violation of antitrust regulation, has launched a criminal probe of major Canadian grocery stores for allegedly fixing the price of packaged breads.

In a statement released Tuesday, Metro Inc., one of the grocery chains under scrutiny confirmed that it was aware of the investigation and that it will “fully cooperate with authorities.”

George Weston Ltd., the parent company of Loblaw, also acknowledged that they were aware of an “industry-wide investigation”, concerning a price-fixing scheme involving certain packaged bread products.

Wal-Mart Canada Corp also confirmed that it was under investigation, promising to cooperate with authorities.

There has been no confirmation of wrongdoing as yet, and no charges have been laid.

On Tuesday evening however, the Competition Bureau raided the offices of “major retailers in Toronto and Montreal”, potentially looking for paper evidence that would point towards a price-fixing scheme.

According the Marie-France Faucher, spokesperson for the Bureau, the Ontario Superior Court of Justice in Ottawa did indeed grant search warrants based on evidence that there are “reasonable grounds” to believe that these major retailers engaged in conduct that might have violated the Competition Act.

Although it is unclear as to why major grocers might have colluded to fix prices of bread, packaged bakery products have been facing stiff competition from healthier alternatives like fresh, artisanal, and gluten-free baked products.

Moreover, the growth of cheaper grocery alternatives like the Loblaw-owned No Frills and FreshCo has compelled big suppliers of baked goods like Canada Bread to lower their prices, slicing into their overall profits.

The bakery market is Canada is worth almost $9 billion, according to data from Agriculture and Agri-Food Canada. George Weston Ltd., which markets well-established brands like Wonder Bread, D’Italiano, Ace Bakery, and Country Harvest is a leader in the baked goods market, holding a 14 percent value share in the industry as of 2014.

If convicted, retailers could race fines of up to $10-million, five years in prison, or both.

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