Nine years after opening an investigation into how Canadian food companies colluded to fix bread prices, the competition commissioner is warning that the government’s competition laws are out of date and enforcement is weak. Testifying at the Senate National Finance Committee on Dec. 13, Competition Commissioner Matthew Boswell expressed concerns about the worsening problem of concentration in the country’s economy. The prevalence of concentration has increased significantly over the last generation, requiring attention from those who are passionate about the country’s economy and policy.
In 2007 and 2011, Canada Bread conspired with Weston Foods executives to raise bread prices, resulting in a $50 million payout from Canada Bread. This occurred as Weston Foods was under the umbrella of George Weston Ltd., which is the parent company of grocery chain Loblaws, and Canada Bread was controlled by Maple Leaf Foods. Despite Canada Bread’s guilty plea under Section 45 of Canada’s Competition Act and its cooperation with the Competition Bureau’s investigation, leniency was granted for sentencing.
The Competition Bureau initiated the investigation after receiving information from an anonymous source in 2017. In executing search warrants against companies such as Loblaws, Metro Inc., Walmart Canada, Sobeys Inc., Giant Tiger Stores Ltd., and Canada Bread, the bureau uncovered evidence of anticompetitive behavior. Immunity from prosecution was granted to Weston and Loblaws for their cooperation during the investigation. To date, 17 search warrants have been served, and the investigation is ongoing.
Reflecting on the investigation, Mr. Boswell acknowledged its complexity and assured the committee of the significant effort dedicated to it. Additionally, he noted that Canada Bread faced the largest fine in Canadian history for price fixing. Court records suggest that the price-fixing scheme amounted to as much as $5 billion. Mr. Boswell lamented Canada’s “atrophy” in its competition measures over the last few decades and criticized the weaknesses in the country’s Competition Law, which have persisted since 1986. He emphasized the misalignment of these policies and approaches with international standards and highlighted the weak enforcement in Canada.
In another context, federal courts and regulators approved the $26 billion takeover of Shaw Communications by Rogers Communications and the Royal Bank’s $13.5 billion acquisition of HSBC, Canada’s seventh-largest rival. These developments in the telecommunications and banking sectors reflect the broader landscape of competition and antitrust issues in the Canadian economy.