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How Canada Combats Price Fixing: Laws and Penalties

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Published by:

David Johnson

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Reviewed by:

Alistair Vigier

Last Modified: 2024-06-01

Are you interested in learning more about price-fixing? When news broke recently that Canada’s four largest meatpacking companies are facing a class-action lawsuit in Quebec for allegedly conspiring to fix beef prices in the province for years, it was, as they say, shocking but not surprising. 

As the Toronto Star reported on March 29, Cargill Inc., JBS USA Food Company, Tyson Foods Inc., and the National Beef Packing Co. stand accused of conspiring to restrict competition in the production and sale of beef products in Quebec since 2015.

The four companies dominate the North American beef market and face similar antitrust actions in the U.S. Cargill, for its part, denies colluding with competitors, claiming it competes “vigorously in the market and conducts [s] ethical business.” 

The topic of price-fixing isn’t top of mind

At the same time, the U.S. Department of Justice claims executives at Tyson and other major poultry producers similarly conspired to fix chicken prices by coordinating “massive, historic price increases” between 2012 and 2019. 

While talk of wild conspiracy theories abounds these days amid the COVID-19 pandemic, Canadians can perhaps be forgiven if the topic of price-fixing isn’t top of mind, even though they’ve likely been victimized repeatedly by real conspiracies involving some of Canada’s and the world’s largest corporations. Indeed, over the last three decades, price-fixing scandals have rocked several industries. 

Suppose you’ve bought any of the following products since the 1990s. In that case, it’s pretty possible you overpaid due to collusion among industry players: cars, gasoline, chocolate bars, telescopes, gold, silver, copper, diamonds, foreign currencies, computers, packaged bread, vitamins, soft drinks (or anything containing high-fructose corn syrup), drywall, salmon, bricks, cellphones, and televisions. 

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Canada’s Competition Bureau

Of course, that list only includes industries where players were caught and called out by Canada’s Competition Bureau or in class action lawsuits handled by a handful of Canadian law firms.

Perhaps the most infamous recent case in Canada involves packaged bread products, where billionaire-owned giants like Walmart and Loblaws copped to their involvement in an industry-wide price-fixing conspiracy that lasted 14 years. 

While Bill Gates has drawn the delusional ire of conspiracy theorists over his involvement in vaccine distribution and development projects, Microsoft and its Canadian arm settled several class actions in 2020  for more than $400 million over accusations they illegally conspired to increase the price of certain software products between 1998 and 2010.

Collusive Pricing Practices in Canada

Despite settling the cases, the companies didn’t admit wrongdoing and “expressly” denied the allegations. According to the website set up to handle consumer claims, processing claims under the settlement was set to wrap up this spring, which tone-deafly included a pun in the domain name “thatsuitemoney.ca.” 

As part of its mea culpa, Loblaw avoided an ill-timed pun instead of tossing crumbs to consumers as a $25 gift card. Though still facing class-action lawsuits for their involvement in the scheme, Loblaw and its related firms were granted immunity from the Competition Bureau for being the first participants in the conspiracy to bring it to the bureau’s attention.  

Price-fixing conspiracies

According to the Competition Bureau’s website, under its Immunity and Leniency Programs, participants in price-fixing conspiracies can avoid prosecution or severe criminal penalties, including fines and jail time, by cooperating with investigators.

The Competition Bureau claims that the immunity and leniency programs are among its “best weapons to combat criminal cartels under the Competition Act.” It’s a weirdly ironic situation where the bureau heavily relies on dishonest bad actors to wake up one day after years of ripping people off, see the light, and admit wrongdoing before taking action.

Even when the Competition Bureau is spurred into action, as in 2007 when Cadbury Adams Canada Inc. provided details of a chocolate price-fixing cartel, the charges don’t stick. Cadbury avoided prosecution under the bureau’s immunity program after giving information about a price-fixing scheme involving big names, including the Canadian arms of Nestle, Hershey, and Mars. 

Public Prosecution Service of Canada

Hershey Canada was fined $4 million but given leniency for its cooperation. At the same time, executives from Mars, Nestle, and a wholesale distributor faced criminal charges in 2013 for their alleged involvement in the scheme from 2002 through 2008.

However, the Public Prosecution Service of Canada ignored the charges in 2015, marking “the end of the chocolate price-fixing matter.” 

With this in mind, it’s likely hard for Canadian consumers to maintain confidence in what’s supposed to be a free-market economy that encourages innovation and incentivizes competitive pricing.

But instead of industry players being matched up like pugilists in a fair, tightly regulated marketplace, numerous examples of price-fixing conspiracies over the years make that marketplace look less like a boxing match and more like a professional wrestling spectacle. 

Anticompetitive pricing activities in Canada

In this scenario, supposed adversaries performatively compete and pretend to hate each other in the ring while being close and friendly back in the dressing room, the match’s outcome fixed from the beginning. The difference is that everyone knows wrestling is fake, yet they recognize the value of entertainment.

In contrast, such fakery in a capitalist free-market economy keeps leaving Canadians poorer. Instead of the Competition Bureau incentivizing bad actors to snitch on themselves in exchange for kid-glove treatment, perhaps it’s time to try a new tactic of radical deterrence through real accountability. Otherwise, Canadians will likely continue to be victimized by price-fixing cartels again and again. 

High-Profile Price-Fixing Scandals That Rocked Canada: An Expose

Over the years, Canada has had its fair share of controversies that have dominated the media landscape. Price-fixing scandals have often stood out for their far-reaching impact on consumers and the marketplace.

These occurrences have brought to light critical issues about corporate governance, consumer rights, and the enforcement of competition laws in the country.

Arguably, the most notorious of such scandals was the bread price-fixing conspiracy that was exposed in 2017. The saga involved two of Canada’s biggest bread producers, George Weston Ltd. and its grocery chain Loblaw Companies Ltd., alongside other major retailers such as Sobeys Inc., Metro Inc., and Walmart Canada Corp.

Price coordination among businesses in Canada

For over a decade, from 2001 to 2015, these industry titans allegedly colluded to coordinate the price of bread, significantly inflating costs at the expense of unsuspecting consumers.

This scandal, dubbed ‘Breadgate‘, generated widespread media attention and public outrage, leading to numerous lawsuits and investigations. After a comprehensive review, the Competition Bureau, an independent Canadian law enforcement agency, concluded that the implicated parties had engaged in anti-competitive practices.

As a result, Loblaw and George Weston admitted to their role in the price-fixing scheme, leading to a $25 million class-action settlement and a pledge to provide eligible customers with a $25 gift card as a goodwill gesture.

How Canada Combats The Issue

Another high-profile price-fixing scandal that dominated Canadian headlines involved a different commodity: chocolate. In 2013, three leading chocolate manufacturers – Nestlé Canada, Mars Canada, and ITWAL Ltd., a national network of independent distributors – were accused of artificially conspiring to inflate chocolate prices.

Although no convictions were made in the case due to insufficient evidence, the controversy underscored the need for stricter competition regulations and corporate transparency in Canada’s food industry.

Similarly, in the mid-2000s, Canada’s gasoline industry was marred by a significant price-fixing scandal that impacted four major gas companies – Ultramar Ltd., Irving Oil, Shell Canada, and Pioneer Energy. The companies were accused of conspiring to fix the price of gasoline in Quebec, which resulted in inflated consumer costs.

After a rigorous investigation, the Competition Bureau found enough evidence to levy heavy fines on the implicated firms, with penalties amounting to millions of dollars.

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Price-Fixing In Canada

These scandals have left an indelible mark on Canada’s corporate landscape and public consciousness. They have exposed the insidious nature of price-fixing and highlighted the inherent flaws within the nation’s competition regulations.

In response to public outrage, the Canadian government has taken significant steps to strengthen anti-trust laws and strengthen the Competition Bureau’s capabilities.

Despite the negative impact of these price-fixing scandals, there is a silver lining. Their media coverage has contributed to greater consumer awareness about corporate malpractices and the need for price transparency. This heightened scrutiny has driven Canadian businesses to adopt better governance practices and commit to fair pricing.

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