Loblaw’s has settled a pair of Price Fixing class actions. The grocery monster and former bakery behemoth has finally agreed pay out $500 million to customers starting sometime later this year. And it’s about time!
Loblaw’s and parent company George Weston Ltd. have agreed to pay customers a total of $500 million in compensation. The suits claimed the two companies artificially inflated bread prices between 2001 and 2015.
The big grab
A Canadian Competition Bureau investigation concluded, in 2018, that the price of a loaf plain white sliced bread had been jacked up by at least $1.50 during the run of the scheme. If you bought two loaves of bread at Loblaw’s during the 14-year period in question, you probably paid more than $1,000 more than you should have in any given year.
Loblaw’s and Weston has previously pleaded guilty to price fixing and promised to cooperate with the investigation in return for immunity to prosecution. In addition to the Weston companies, Metro, Walmart Canada, Giant Tiger, Sobeys and bakery supplier Canada Bread Co. were all charged under the probe.
The aftermath
Canada Bread was fined $50 million after pleading guilty to price fixing. The Competition Bureau noted, that was the largest fine handed down in Canada to that point.
Sobey’s and Metro both alleged that the Weston companies falsely implicated them in the price fixing scandal. Walmart and Giant Tiger both claimed they did not participate in the price fixing scheme. Metro went as far as to claim Weston and Loblaw’s implicated the other companies in the scandal to try to spread blame over the entire supermarket industry.
What now?
“We are pleased to be able to put this issue behind us at both Loblaw and George Weston,” said Loblaw’s Chief Financial Officer Richard Dufresne told shareholders on a 2nd Quarter Earnings conference call last Thursday.
Galen Weston, who is Chairman of Loblaw’s as well as Chairman and CEO of Weston Ltd., claimed the whole mega-rip-off was a mistake: “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 continued, in his statement.
The overall tone of the apology to Canadian shoppers was appropriately contrite: “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’s President and CEO Per Bank added, the grocer would seek to, “earn [Canadians’] trust whenever and wherever they choose to shop with us.”
My take
Given the circumstances – that Loblaw’s, Weston’s and Canada Bread were caught with their hands in the cookie jar (more precisely, the bread box) – the abject apologies from Weston and Bank were the least they could offer. But the terse, antiseptically-worded assertions ring hollow to me. And, I’m betting, to all the shoppers who were ripped off.
But the words do reveal that Weston etal are well aware they’ve lost the trust of Canadians. Not only because of the bread boondoggle. But because of their parade of sneaky pricing and merchandising moves over the past few years. And the damage to their image caused by draconian attempts to head off grocery shoplifting.
The bottom line:
Anyone who bought bread from Loblaw’s between 2001 and 2014 will have the opportunity to apply for compensation. But it may be months before the details of the $500 million payout are finalized…
~ Maggie J.