Anyone remember the publicity stunt a few years back where Loblaws said, “Hey everybody, we are engaged in a massive price fixing ring between Canada’s two biggest bakeries and the Canadian grocery oligopoly, here is a $25 gift card, please take it and give up your future right to take part in a class action lawsuit against us?”
Given that news broke in 2018, you can be forgiven for forgetting the price-fixing scandal of one of the most fundamental pieces of our food system – bread. Last week the scandal was back in the news when Canada’s Competition Bureau made headlines with a $50 million fine against Canada Bread in what was part of a plea deal made by the baker for their role in the multi-year price-fixing scandal.
Bread is a quintessential foodstuff. Every day there are thousands of kids across Canada whose lunch features two pieces of bread with something between. On the other side of the world, I have watched my Kenyan friends eat an entire loaf of white bread as lunch after a busy morning working in the fields. When we were sick as kids, it was toasted bread with honey that often settled our stomach. Bread is not for the rich or the poor… it is for everyone.
And, even though what bread “is” takes on slightly different forms across the world, a massive number of societies have bread as a staple part of their diet. It is that fact that makes this scandal especially horrid. Bread should be a great equalizer. Sure, it can be a luxurious addition to a fancy meal, but more importantly, it should always be available as an affordable, dense source of energy that helps kids get the calories they need as they grow and learn, regardless of their family’s income level.
Instead, here in Canada, this price-fixing scandal showed us how blatantly our food retail chain oligopoly feels like they can cheat the market and cheat Canadians on the price of that staple food. We have uncompetitive food retail value chains that are dominated by a small number of companies who engage in this type of anti-competitive behaviour regularly. To make matters worse, our regulators take ridiculous lengths of time to provide judgment on what was an open-and-shut case of market manipulation.
Moving up a level from the justifiable outrage that billionaires like Michael McCain and Galen Weston stole money from hard-working Canadian families by fixing the price of a basic foodstuff is an important next step here. It is easy to stop at thinking a $50 million fine seems enough to pay that price back.
Instead, think about the fine in terms of McCain’s fortune, considering he was the CEO of Canada Bread at the time of the price fixing. He has an estimated net worth of over $1 billion USD, meaning he was assessed a fine of less than five per cent of his fortune that was enhanced by effectively stealing from everyday people. Not to mention he is still able to engage in this same behaviour in current food companies still under his control (Canada Bread was sold to Grupo Bimbo in 2014). Nothing has been changed to ensure that this type of anti-competitive behaviour doesn’t happen again, and it brings to light a serious deficiency in the competitive markets that are needed for Canadian economic success.
Canada has serious issues with anti-competitive behaviour. If one reads the Canadian Competition Act you would think we have the world by the tail here. This Act is quite extensive and outlines a number of anti-competitive practices that are theoretically not allowed in the marketplace. The problem is that our Act is not accessible to everyday Canadians.
The actual process of proving anti-competitive behaviour has been made incredibly burdensome and requires incredibly large investments in legal resources to execute a challenge. There are not many small and medium-sized family businesses that can fork over six and seven-figure legal fees to ensure fair marketplaces for all. Like too many other facets of our bureaucracy, we have the window dressing to make it appear all is fine, but when the rubber hits the road everyday Canadians are run over roughshod by the McCains and Westons of the world.
Our own farming experience is seeing the result of uncompetitive behaviour right now; despite wholesale pork prices being significantly reduced for all cuts, prices at the grocery store continue to go up for daily family staples. Last week in Listowel if you wanted to buy sliced black forest ham – one of the most popular things to go in between those two slices of bread in our house – the cheapest option was Wal-Mart and it cost $16.60 per kilogram. If you are a high roller and shop at Zehrs you had to shell out $23.30 per kilogram. The folks that actually make the ham like Pillers or Maple Leaf would have paid approximately $2.30 per kilogram for the unprocessed ham and, in conversations with meat market participants, it was suggested the retailer is likely taking a 100-125 per cent margin at these prices.
How many of us can remember Galen Weston and his cronies singing the blues in front of our parliamentarians that they only make $4 per $100 spent? It wasn’t true then and it isn’t true now. Pork is incredibly cheap right now, yet consumers are not benefiting from that reality because our North American food system is littered with anti-competitive behaviour.
Behaviour that pads the pockets of a small number of people by stripping the pockets of everyone else. These problems are then worsened by a cumbersome regulatory system that disproportionately hinders smaller businesses who don’t have the resources to navigate it. This phenomenon then weakens competition by driving further consolidation as small businesses give up.
If we were serious about tackling inflation in this country, we would take a pause from the singular focus on interest rates and examine how to make Canada more competitive. In doing so we would move toward making life for everyday Canadians more affordable. The real crisis here is it is everyday Canadians are paying the price for an uncompetitive status quo in systems that they are powerless to manipulate.
As long as it is impossible for those without extensive legal resources to hold folks like Michael McCain and Galen Weston accountable, they will continue to conspire in boardrooms to take all they can, no matter the human cost.
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Stewart Skinner is a local business owner, former political candidate, and has worked at Queen’s Park as a Policy Advisor to the Minister of Agriculture, Food, and Rural Affairs. He can be reached at stuskinner@gmail.com or on Twitter: @modernfarmer.
