Loblaw to dish out $500 million in lawsuit settlements over bread price-fixing scheme

By Quinn Patrick

Loblaw and its parent company George Weston Ltd. have agreed to pay $500 million to settle two class-action lawsuits over an alleged bread price-fixing scheme.

Loblaw was just one of several George Weston companies to be part of the class-action cases, which also included Metro, Walmart Canada, Giant Tiger, Sobeys and bakery supplier Canada Bread Co.

The lawsuits were filed on behalf of all Canadians who purchased packaged bread after Nov. 1 2001, with the plaintiffs accusing the companies of cooperating in a 14-year industry-wide price-fixing conspiracy from 2001 to 2015, leading to an artificial increase in the cost of packaged bread.

“We are pleased to be able to put this issue behind us at both Loblaw and George Weston,” said Loblaw chief financial officer Richard Dufresne during an earnings call Thursday.

According to a statement released by the company, George Weston agreed to pay $247.5 million in cash and Loblaw would pay $156.5 million in cash.

Loblaw also agreed to pay another $96 million in credit, which it had previously paid to customers under the Loblaw Card program.

Chairman and chief executive of George Weston Galen Weston said “this behaviour should never have happened.”

“On behalf of the Weston group of companies, we are sorry for the price-fixing behaviour we discovered and self-reported in 2015,” said Weston, who is also Loblaw’s chairman, in a statement.

“We have the privilege of serving Canadians from coast to coast. That privilege needs to be earned each and every day. Reaching a settlement on this matter was the right thing to do in response to previous behaviour that did not meet our values and ethical standards.”

Loblaw president and CEO Per Bank pledged that the grocery giant would look for any opportunity to earn back Canadians’ trust in the future. 

“Canadians count on Loblaw to provide great value and we seek to meet their needs and earn their trust whenever and wherever they choose to shop with us,” said Bank. “We will continue to work hard to deliver on that commitment.”

Loblaw reported a 10% drop in its second-quarter earnings, which it attributed to the lawsuit payments. However, Dufresne said that Loblaw customers won’t see that reflected in its prices. 

According to the lawyers representing the plaintiffs, pending court approval, the settlement is slated to be the biggest antitrust lawsuit payment in Canadian history.

“This is a significant milestone in Canadian class action history and sends a strong message that conduct that harms consumers will not be tolerated,” said lawyer Jay Strosberg in a press release.

Now the lawyers will shift their focus onto the other Weston companies allegedly involved in the price-fixing scheme, including Canada Bread, Sobeys, Metro, Walmart Canada and Giant Tiger.

The Competition Bureau began investigating the alleged scheme in 2016. 

Weston Foods and Loblaw had both previously admitted their participation in an “industry-wide price-fixing arrangement” but received immunity from prosecution in exchange for their cooperation.

The companies added at least $1.50 to the price of a loaf of bread, alleged the bureau in 2018, according to court documents. 

Canada Bread was fined $50 million last year after pleading guilty to four counts of price-fixing bread products under the Competition Act. 

The Competition Bureau said it was the highest fine ever imposed by a Canadian court for price-fixing.

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