Grupo Bimbo-owned Canada Bread is seeking damages against Maple Leaf Foods over a fine it incurred in a price-fixing case investigated by the country’s competition authority.
Canada Bread has filed a legal claim in an Ontario court against meat producer Maple Leaf Foods, which sold the business to Mexico’s Grupo Bimbo in 2014 before pricing irregularities emerged. Maple Leaf Foods is contesting the claim.
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A C$50m ($36.8m today) fine was imposed on Canada Bread last year after the company pleaded guilty to four counts of price-fixing dating back more than a decade following a wider industry probe by the Competition Bureau of Canada, an investigation which is still ongoing.
“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 Toronto-headquartered business said in a statement yesterday (12 September).
The company added it had filed a “Statement of Defence and Crossclaim in the Ontario Superior Court of Justice against Maple Leaf Foods to hold it accountable for Canada Bread’s damages”.
In the statement that did not include any direct management comments, the bakery business explained: “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.
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By GlobalData“Further, to the extent Canada Bread is liable to the plaintiffs in the class actions, this claim seeks compensation and indemnity from Maple Leaf.”
For its part, a line in the statement pertaining to Grupo Bimbo said the Mexican group “intends to hold accountable those responsible for its damages”.
Mississauga, Ontario-based Maple Leaf Foods has refuted the claims, responding via its senior vice president and general counsel Suzanne Hathaway.
“We reject these claims in their entirety,” she said.
“Maple Leaf Foods acted appropriately at all times, including with respect to making full, plain and true disclosure to Grupo Bimbo at the time of its acquisition of Canada Bread,” Hathaway said in a statement.
“The court ruled in 2021 that the plaintiffs had no valid legal claims against Maple Leaf Foods. That ruling stands today. We will continue to vigorously defend ourselves against these unfounded claims.”
In December 2017, Canadian food group Weston Foods and supermarket Loblaw, both subsidiaries of George Weston, announced their participation in what they described as an “industry-wide price-fixing arrangement” involving the coordination of retail and wholesale bread prices.
In exchange for their full cooperation with the Competition Bureau’s investigation, Weston Foods, Loblaw and George Weston received immunity from prosecution.
Just Food contacted the Competition Bureau of Canada to ascertain what the status of events is in the industry-wide probe and whether other companies are still being investigated.
In response, a spokesperson said it would be “inappropriate” for the Bureau to comment on the Canada Bread court proceedings against Maple Leaf Foods but gave some insight into the investigation.
“The Bureau continues to investigate alleged price-fixing by other companies, including Metro Inc., Sobeys Inc., Wal-Mart Canada Corporation, Giant Tiger Stores Limited, and Maple Leaf Foods Inc. There is no conclusion of wrongdoing at this time and no charges have been laid against those parties,” the spokesperson said.
Meanwhile, Canada Bread “alleges that Maple Leaf failed to act in accordance with the law and breached its management agreements” with the company prior to Grupo Bimbo’s ownership.
It added in the statement: “From 1995 to 2014, as the controlling shareholder, Maple Leaf appointed directors to serve on the Canada Bread board of directors and positioned some of the most senior officers of Maple Leaf to operate Canada Bread and occupy the most senior executive role.
“Maple Leaf represented to Canada Bread that in performing services for Canada Bread it would comply with all applicable laws.
“The claim alleges that Maple Leaf’s personnel directed and participated in certain anti-competitive conduct, which was the subject of an investigation by the Competition Bureau of Canada into the commercial bread industry.”
