Loblaw, George Weston to settle class action over bread price-fixing for $500 million

Loblaw Cos. Ltd. and its parent company George Weston Ltd. say they have agreed to pay $500 million to settle a pair of class-action lawsuits regarding their involvement in an alleged bread price-fixing scheme.

“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 on an earnings call Thursday.

The class-action cases were brought against a group of companies that includes Loblaw and the Weston companies, Metro, Walmart Canada, Giant Tiger, Sobeys and bakery supplier Canada Bread Co.

They alleged the defendants conspired to fix the price of packaged bread in Canada, and were filed on behalf of all residents of Canada who purchased packaged bread after Nov. 1, 2001.

In a press release, George Weston said it would pay $247.5 million in cash, while Loblaw would pay $252.5 million, made up of $156.5 million in cash and credit for $96 million previously paid to customers by Loblaw under the Loblaw Card program.

Loblaw chairman Galen Weston, who is also chairman and chief executive of George 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,” he said 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 added the grocer would seek to “earn (Canadians’) trust whenever and wherever they choose to shop with us.”

“We will continue to work hard to deliver on that commitment,” he said in the press release.

Loblaw reported Thursday that its second-quarter earnings fell 10 per cent, attributing the decline to the class-action settlement. Dufresne said the settlement will not affect prices for customers.

Lawyers representing the plaintiffs said the payout, subject to court approval, is the largest antitrust settlement 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 Jay Strosberg, managing partner of Strosberg Wingfield Sasso LLP, in a separate press release.

The lawyers said their focus will now shift to preparing for trial in the ongoing class actions against Canada Bread, Sobeys, Metro, Walmart Canada and Giant Tiger.

The plaintiffs accused the companies of participating in a 14-year industry-wide price-fixing conspiracy between 2001 and 2015 leading to an artificial increase in packaged bread prices.

The Competition Bureau began investigating alleged bread price-fixing in January 2016. Weston Foods and Loblaw, both subsidiaries of George Weston at the time, had previously admitted their participation in an “industry-wide price-fixing arrangement” and received immunity from prosecution in exchange for co-operating.

At least $1.50 was added to the price of a loaf of bread, the bureau alleged in court documents in 2018.

In June 2023, Canada Bread was fined $50 million after pleading guilty to four counts of price-fixing bread products under the Competition Act. The Competition Bureau called it the highest price-fixing fine ever imposed by a Canadian court.

In its statement of defence in the Ontario class action file last October, Canada Bread denied participating in a wide-ranging conspiracy to fix the price of bread, and denied profiting from the alleged conspiracy or from the price increases it admitted to.

Metro submitted a statement of defence and cross-claim to the Ontario Superior Court late last year accusing Loblaw and George Weston of conspiring to implicate the rival grocer.

Metro denied being involved in bread price-fixing and accused the companies of trying to spread the blame across the industry and avoid public perception that Loblaw was the sole retailer involved in price-fixing.

Sobeys also filed a statement of defence and cross-claim in the class action and has said it was falsely implicated.

Walmart Canada has also denied conspiring to fix the price of bread or violating the Competition Act, while Giant Tiger said it did not participate or know about the alleged conspiracy.

— With files from Rosa Saba

This report by The Canadian Press was first published July 25, 2024.

Companies in this story: (TSX:L, TSX:WN)

Sammy Hudes, The Canadian Press