Canadian News Headlines – Metro, Sobeys say they didn’t violate Competition Act as bread price-fixing story unfolds – Business

Canadian news headlines

Two of Loblaws’ biggest rivals in the grocery business say they are fully co-operating with an investigation by Canada’s Competition Bureau into allegations of fixing prices for baked goods, and add that they don’t believe they have run afoul of Canada’s competition rules.

On Tuesday, Loblaws said it had participated in a scheme to set the price for certain baked goods for more than a decade, but would avoid punishment in the case because it had tipped off the competition watchdog once upper management became aware of it.

Loblaws and bakery parent George Weston Co. were both involved in the practice, whereby baked good makers and grocery retailers would raise prices on certain items in conjunction with each other. 

“This is a difficult matter and clearly something that never should have happened,” said Galen G. Weston, the CEO of both companies, said in a statement Tuesday.

The Competition Bureau executed search warrants at the offices of many companies in the space this summer and while no charges have been laid, it says it is still investigating the matter. The bureau has also yet to name anyone else involved, but many of Loblaws biggest rivals have already come out to state their innocence.

“Based on the information processed to date, we have found no evidence that Metro has violated the Competition Act,” a statement from Montreal-based grocer Metro Inc. said Wednesday. “We do not believe that the bureau’s investigation will have a material adverse effect on the corporation’s business, results of operations or financial condition,” the statement said, adding that the grocer is “fully co-operating” with the bureau, as well as launching its own internal investigation.

Nova Scotia-based Sobeys was singing a similar tune, saying it too is co-operating fully with the competition watchdog. “At this time, Sobeys does not believe that it or any of its employees have violated the Competition Act.  Any assertion of an industry-wide price-fixing arrangement has not been proven,” Sobeys said.

Bakery giant Canada Bread noted in a statement on Wednesday that the company operates “with the highest ethical standards and is co-operating fully with the investigation.” 

“Neither the company nor any associates have been charged with any offences,” Canada Bread said, adding “we continue to remain focused on making and delivering high-quality products that our customers and consumers rely on every day.”

Toronto-Dominion bank analyst Michael Van Aelst, who covers Canada’s grocery sector, said in a research note on Loblaws stock Wednesday that financial penalties are only part of the concern for any companies involved.

“Reputational damage is always a concern in these cases, though most competitors are being investigated and at least Loblaw was the whistle-blower,” he said. “We are not anticipating a material shift in consumer traffic patterns.”



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