Price-fixing accusations cast shadow on food industry giants

Posted on August 17, 2023 by Ryan Dahlman

We have just learned that major Canadian food companies, namely Loblaw, Metro, Maple Leaf Foods, Walmart, and Weston Bakeries, find themselves entangled in a class-action lawsuit filed in Quebec. It seems inevitable that we may soon witness a similar class-action lawsuit affecting the rest of Canada.

The lawsuit in Quebec alleges that these industry giants colluded to unlawfully manipulate the price of meat, resulting in households allegedly paying more than $4 billion in unjustified excess. At the centre of the case lies a critical piece of evidence – an email dating back to March 2007, wherein the former president of Maple Leaf Foods, Michael McCain, outlines a concerning discussion with Paul Del Duca, a former Senior Vice President at Metro in Ontario.

There is some truth in the perspective that this is just another class-action lawsuit perfect for an ambulance-chasing law firm seeking work. However, the implications of this lawsuit are profound, casting a shadow of doubt on the integrity of these corporate behemoths and raising serious concerns about consumer justice in the Canadian market. The gravity of these allegations cannot be understated, as they potentially represent a betrayal of trust and a breach of ethical business practices, impacting countless Canadian families.

For many years, observers have speculated that the price-fixing culture in the food industry might extend beyond just bread and impact other sections of the grocery store, including meat. In 2017, when Loblaw and Weston Bakeries admitted guilt for fixing bread prices for 14 years, they also implicated Empire/Sobeys, Metro, Giant Tiger, Walmart, and Canada Bread. Initially, all companies denied involvement, but Canada Bread, under new ownership, recently admitted their role and paid a $50 million fine, revealing a link between bread and meat price-fixing.

Canada Bread was owned by Maple Leaf Foods during most of the 14 years when the alleged bread price-fixing scheme was ongoing. The email from 2007, likely written by Michael McCain himself, suggested that a “new pricing strategy” could be considered for other food categories, including meat.

Data shows that the average household spends over $2,000 on buying meat trifecta components, which include beef, chicken, and pork, making it more than double the amount Canadian households spend on bakery goods. The financial implications for each and every one of us are significant.

Interestingly, the Quebec-based lawsuit mentions the same companies involved in the alleged bread price-fixing scheme, except for two companies, Empire/Sobeys and Giant Tiger. Although both carry Maple Leaf Foods branded products, no rationale was provided for their exclusion.

For months now, many Canadians have accused the food industry of gouging consumers, citing “record profits” recorded by many companies. Coping with market conditions and higher operational costs is one thing, but colluding and breaking the law is an entirely different matter.

If proven true, the accusation of price-fixing strikes at the core of fair competition, stifling the fundamental principles that govern a healthy market. When corporations conspire to manipulate prices, consumers become the ultimate victims, forced to bear the burden of unjustified costs while their trust in the system erodes.

Particularly alarming in this case is the alleged involvement of high-ranking executives from prominent companies. The email correspondence between McCain and Del Duca serves as a chilling reminder that unethical practices may have reached the upper echelons of corporate leadership, where decisions of far-reaching consequence are made.

Such revelations expose the vulnerabilities in our corporate governance and demand immediate scrutiny to ensure that similar breaches of trust do not persist.

In other words, the food industry indeed has a price-fixing problem that needs to be addressed as soon as possible.

The significance of the class-action lawsuit becomes even more pronounced considering the entity spearheading the legal action. The lawyers involved are taking up the mantle for the Competition Bureau, which has faced criticism for its lacklustre track record in enforcing fair competition practices. Although Loblaw and Weston Bakeries received immunity when coming forward in 2015, the gift cards and apologies offered to Canadians do not make them feel protected in any way.

In the United States, executives caught colluding go to jail, while in Canada, they receive immunity. The contrasts could not be more significant. Rather than waiting for companies to admit guilt or relying solely on lawyers to do its work, the Competition Bureau needs to step up as soon as possible.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

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