Skip to main content

A group of the country’s largest retailers and bread makers will ask an Ontario court on Wednesday to delay a class-action lawsuit that alleges they overcharged consumers by an estimated $5-billion over 15 years by artificially raising bread prices.

But two consumers who are trying to launch the class-action on behalf of Canadian shoppers counter the matter should not be postponed because the delay could result in the case taking another year before it goes forward in the alleged industry-wide bread price-fixing conspiracy.

The price-fixing scandal surfaced about a year ago after grocer Loblaw Cos. Ltd. and its parent George Weston Ltd., which owns bread maker Weston Foods, disclosed they had struck a deal with the federal Competition Bureau to avoid criminal charges for their role in the alleged conspiracy to fix bread prices between 2001 and 2015.

“The concern about the administration of justice is significant in this case,” reads a document filed on behalf of Marcy David and Brenda Brooks in their bid to get the Ontario Superior Court’s nod to launch the class-action lawsuit. “The wrongdoing in our case is notorious and has impacted almost every family in Canada. The public understandably expects an expeditious proceeding.”

The case has raised troubling questions about how a price-fixing conspiracy could have lasted so long and whether a similar conspiracy could exist in other supermarket aisles.

Loblaw and Weston revealed in late 2017 they were involved in what they called an industry-wide scheme to artificially boost prices of packaged breads, buns, bagels, rolls, naan, English muffins, wraps, pitas and tortillas. Loblaw and Weston said the scheme included other retailers and another bread maker; Canada Bread Co. is also a target of the class-action lawsuit, along with grocers Sobeys Inc., Metro Inc. and discounters Walmart Inc. and Giant Tiger Stores Ltd. Also being sued is Maple Leaf Foods Inc., which owned Canada Bread during much of the alleged conspiracy, and the Mexican Grupo Bimbo, which bought Canada Bread in 2014.

Aside from Loblaw and Weston, the accused companies have said they have no knowledge of their part in the price fixing or declined to comment. Lawyers reached this week who are involved in the latest spat also declined to comment.

Jeffrey Leitzinger, an economist hired by the complainants, estimates in a filing that Weston and Canada Bread charged consumers more than 13.4 per cent – $5-billion – what they should have between 2002 and 2017.

However, Loblaw spokesman Kevin Groh said in an e-mail the estimate is “an over-simplification and overstates any potential damages. The courts will determine the appropriate figure over the coming years.”

Loblaw doesn’t expect the outcome of class-actions to have “a material adverse impact on its financial condition or prospects," it said last month in reporting its third-quarter results. “The company’s cash balances far exceed any realistic damages scenario and therefore it does not anticipate any impacts on its dividend, dividend policy or share-buyback plan.”

The accused companies argue in court documents that the class-action should be put on “pause” until the Supreme Court of Canada rules on another case involving alleged price-fixing of optical disc drives.

The accused companies in the bread case, including Loblaw and Weston, say in filings that the Supreme Court ruling could apply to the bread price-fixing matter. One issue is whether “umbrella purchasers” – consumers who bought bread from companies other than those accused – should be part of the class-action based on the assumption that price hikes would have rippled through the industry. Another issue is whether the estimate of losses suffered is credible.

“The benefits to the parties and the court from the pause in terms of economy and fairness would far outweigh any effect of a relatively brief postponement of the hearing,” the accused companies said in a court document.

But the complainants say the delay could be a year, based on a schedule already set out for the class-action certification process. “The damages are ongoing,” they say in court documents, adding the $5-billion estimate is conservative.

They say at least some of the accused companies have made decisions that could effectively put a substantial amount of money beyond the reach of would-be class-action members.

For example, Weston and Loblaw, which have admitted liability, have not yet put money aside for a potential class-action damages award. In the meantime, the companies have paid or are forecast to pay almost $1.8-billion to shareholders in dividends since 2015, when the companies have said they became aware of the conspiracy, filings say. Included in the dividend payments is about $612-million for controlling shareholders W. Galen Weston and his son Galen G. Weston, the documents say.

“Looking only at the [companies] that have admitted liability, history tells us that a one-year pause will see hundreds of millions of dollars put beyond the reach of the consumers victimized by illegal behavior,” they say.

Loblaw in January started to distribute $25 gift cards to consumers who said they had bought bread products at its stores; so far customers have redeemed about $70-million, the retailer said last month. It has said it would book up to a $150-million charge to cover the cards' cost and so far has recorded $111-million of those charges.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe