Mar 7, 2018
Bread could be 'first cut' to revealing more price-fixing schemes: Former Competition Bureau head
The former head of Canada’s Competition Bureau says makers of other consumer products could be engaging in similar price-fixing conspiracies similar to the bread scandal that has ensnared the country’s grocery sector.
“Maybe this was just the first cut,” Melanie Aitken, former head of Canada’s Competition Bureau Commissioner, told BNN in an interview Wednesday. “It’s not hard to imagine that there are other products out there – or groups of products – that you and I use every day – like bread… where this is going on.”
While Canada’s concentrated grocery sector and small number of producers make it easier for competitors to collude and drive up price, the Competition Bureau lacks the resources to expose those conspiracies, said Aitken.
“I’m not sanguine about the bureau uncovering one of them necessarily – it’s not a highly resourced agency for good or for bad,” she said.
Aitken left the bureau in 2012 and is now Bennett Jones’ managing principal and co-chair of its competition and foreign investment practice.
Loblaw (L.TO) and George Weston Ltd. (WN.TO) have received immunity from prosecution after admitting to involvement in what companies say was an industry-wide price-fixing arrangement that took place between 2001 and 2015, affecting popular bread products in Canada.
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THE PRICE OF BREAD
The companies received immunity from criminal prosecution after reporting the activity to the Competition Bureau. However, more details on the price fixing scandal will likely continue to emerge as other participants look to cut a deal, Aitken said.
“The incentives to go in and cooperate are very significant even if you missed the golden immunity opportunity,” said Aitken. “You will get a reduction in your fines, you can protect your employees from any kind of criminal prosecution. So, dollars to donuts – not to talk about bread – someone else is in there too.”
Loblaw is offering $25 gift cards to customers affected by the company’s price-fixing activities. Last month, the company recorded a $107 million charge related to the scandal.
Aitken said that while the gift cards are a good step in Loblaw’s attempt to rehabilitate its image in the wake of the scandal, its move to tar everyone in the sector with the scandal has been its most effective strategy.“Loblaw handled it pretty well,” Aitken said. “They have immunity from prosecution, and – probably most important from a competitive prospective – they have made sure to pull everyone under the bus with them.”