TORONTO — Maple Leaf Foods Inc. has launched a defamation lawsuit against Canada Bread Co. Ltd. and its parent company Grupo Bimbo.
The lawsuit comes after Canada Bread accused Maple Leaf of using it as a "shield" to avoid liability in an alleged bread price-fixing scheme, which is subject of two class-action lawsuits and an ongoing Competition Bureau investigation.
In its lawsuit, Maple Leaf says allegations that the company was aware of or played a role in the alleged conspiracy are unfounded, defamatory and devoid of merit.
Maple Leaf was Canada Bread's controlling shareholder until it was purchased by Grupo Bimbo in 2014.
A spokesperson for Canada Bread said Maple Leaf's claims are without merit.
Canada Bread is so far the only company to have been fined by the Competition Bureau in relation to the alleged bread price-fixing conspiracy. It pleaded guilty to four counts of price-fixing in 2023 and took a $50-million fine.
However, it has previously denied participating in a "lengthy, wide-ranging conspiracy" to fix the price of bread, and has said that any anticompetitive behaviour it participated in was at the direction and to the benefit of Maple Leaf.
Maple Leaf in its lawsuit says there is no merit to the allegations the bureau has made against Canada Bread concerning an alleged conspiracy.
The Competition Bureau began investigating the alleged scheme in 2016, and has alleged that at least $1.50 was added to the price of a loaf of bread over 16 years.
Loblaw and Weston Foods, both subsidiaries of George Weston at the time, received immunity from prosecution after admitting to participating in an "industry-wide price-fixing arrangement."
The major grocers, along with Canada Bread and other companies, are also the subject of two class-action lawsuits concerning the alleged conspiracy, though Loblaw and George Weston recently settled in both suits for a combined $500 million.
The other grocers and food companies implicated in the ongoing lawsuits have denied participating in the alleged conspiracy.
The plaintiffs for the Ontario-based class action lawsuit recently applied to have Maple Leaf added to the class action as a defendant because of its past ownership of Canada Bread, but were not successful.
Canada Bread has alleged Maple Leaf is liable for any damages it has sustained or will sustain from the Competition Bureau investigation and the class action lawsuits, which Maple Leaf has refuted.
Maple Leaf's lawsuit accuses Canada Bread and its owner Grupo Bimbo of engaging in a "collusive and unlawful scheme" to shift blame onto Maple Leaf for what it claims is mismanagement of the company after it was acquired.
It also claims Grupo Bimbo and Canada Bread didn't conduct a proper investigation into the bureau's allegations before Canada Bread took steps to seek leniency in the face of the investigation, despite warnings from Maple Leaf to be careful and not make "unfounded admissions of wrongdoing."
Maple Leaf alleges the two companies have conspired to shift liability onto it, "even though any such liability is the direct result of their own poor and ill-advised choices."
Grupo Bimbo did not immediately respond to a request for comment.
This report by The Canadian Press was first published Nov. 22, 2024.
Companies in this story: (TSX:MFI)
Rosa Saba, The Canadian Press
