Toronto

Watchdog raids offices of grocery retailers in price-fixing probe

The Competition Bureau says it has raided the offices of certain companies in a criminal investigation tied to alleged price fixing following statements released by some of the country's largest grocery chains.

A spokesperson for the Competition Bureau says no charges have been laid at this time

The Competition Bureau says it believes that certain individuals and companies have engaged in activities contrary to the Competition Act. (Philippe Wojazer/Reuters)

The Competition Bureau says it has raided the offices of certain companies in a criminal investigation tied to alleged price fixing following statements released by some of the country's largest grocery chains.

The bureau says the Ontario Superior Court of Justice in Ottawa granted search warrants based on evidence that there are reasonable grounds to believe that certain individuals and companies have engaged in activities contrary to the Competition Act.

Spokeswoman Marie-France Faucher says bureau officers are conducting searches and gathering evidence to determine the facts.

She says there is no conclusion of wrongdoing at this time and no charges have been laid, adding she could not reveal more details as the bureau is required to conduct investigations confidentially.

Loblaw Companies Ltd. and George Weston Ltd. confirmed they are aware of an industry-wide investigation by the Competition Bureau concerning a price-fixing scheme involving certain packaged bread products.

Mark Satov, the founder of SATOV Consultants Inc., told CBC News Network Tuesday evening he would be surprised if there was a widespread organized price fixing scheme.

Mark Satov is the founder of SATOV Consultants Inc. (CBC)

"It would be very hard to keep quiet; there's records of all communications," said Satov.

He said what could be possible is illicit communication between people in lower positions within the organizations and he used a hypothetical example to explain how it could work.

"So maybe the person who runs dairy at Loblaws has found a way to communicate with the person who runs dairy at Metro to figure out when things are going on special," he said. "But if it were going out further than the chief merchant, I think it's just too big a risk to take."

What is price-fixing?

Satov says price-fixing is "the oldest trick in the book" in many industries.

"To get [their] share of a category [they say], 'I'm going to have to price this loaf of bread at $3.99," he explains. "But if they had assurances that their competitor was going to be at $4.49, they could price it at $4.19 and still be the best price that day."

Satov says this is a serious crime with big consequences.

"People do go to jail for things like this, so that's why I'd be surprised if people who were very senior were aware of it."

George Weston and Loblaw said in a joint statement that they are co-operating fully but would not offer further comment.

Metro Inc. says the investigation concerns certain suppliers and Canadian retailers and that it fully co-operates with the authorities, but also declined further comment.

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