Home News Walmart cuts Weston as bread supplier months after allegations of price-fixing surface

Walmart cuts Weston as bread supplier months after allegations of price-fixing surface

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The price collusion likely cost consumers billions of dollars.

TORONTO — Walmart Canada Corp. is cutting ties with Weston Foods, the Financial Post has learned, months after the bread supplier and its corporate affiliates acted as whistleblowers in an alleged 14-year scheme to fix the price of bread in Canada.

Weston Foods, the fresh and frozen baked goods subsidiary of George Weston Ltd., the largest shareholder of Loblaw Cos., was informed by Walmart of the pending ouster in a letter earlier this month, sources said, a decision confirmed by Walmart Canada on Friday.

The news comes five months after Canada’s biggest grocer and George Weston sent shock waves through the industry after admitting they co-operated with a Competition Bureau probe into alleged collusion between Canada’s biggest bread producers and several large retailers, including Walmart.

“We’ve informed Weston Bakeries of our decision to reduce the number of suppliers for the commercial bread area,” Anika Malik, spokeswoman for Walmart Canada, said in a statement on Friday. “This decision was motivated by commercial reasons, not the Competition Bureau investigation. We continue to strive to provide our customers with the best value and service for all products.” The retailer declined further comment.

Currently, Walmart sells Weston-made commercial bread brands such as Wonder Bread, D’Italiano and Country Harvest across the country, but will stop carrying those products over the next couple of months. Industry rival Canada Bread, whose brands include Villagio and Dempster’s, remains a supplier.

“We understand that some will draw the conclusion that this relates to our decision to report illegal activity in the industry,” Weston Foods said in an emailed statement on Friday. “We don’t see it that way.” Weston Foods has “always had a good relationship with Walmart Canada,” it said. “We continue to have conversations about our future working together.”

The Competition Bureau’s ongoing investigation, which has not yet resulted in charges being laid, began in March 2015 after whistleblowers at Weston and Loblaw approached the federal department in order to disclose their participation in the alleged scheme.

Court documents unsealed in February allege Canada Bread and Weston, the country’s top two bread producers, participated in a price fixing scheme with major grocery retailers including Loblaw, Walmart, Sobeys, Metro and Giant Tiger that inflated the price of bread by at least $1.50 between 2001 and 2015.

According to court documents, Simon Bessette, a senior competition law officer at the bureau who is leading the bread price-fixing investigation, swore in an affidavit that “Canada Bread was a pricing leader and Weston was a follower” in several of 15 monitored price increases, though the officer believed both parties would announce the price increases at roughly the same time. It is alleged that in supplier-retailer meetings Loblaw, Walmart, Sobeys, Metro and Giant Tiger accepted price increases from the suppliers on the condition that their retail competitors would also accept them.

In 2016, Canada Bread was the largest supplier of fresh commercial bread in Canada, with 40 per cent market share, and Weston was close behind, with 38 per cent, the court documents said.

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