Bimbo Seeks $2B in Damages from Maple Leaf Foods in Canada Bread Price-Fixing Case

Grupo Bimbo, a leading global baked goods company, has initiated legal action against Maple Leaf Foods Inc., seeking damages of C$2 billion ($1.42 billion). The lawsuit stems from Grupo Bimbo’s 2014 acquisition of Canada Bread and allegations of price-fixing within Canada’s bread industry.

In a statement of claim filed on November 28 with the Ontario Superior Court of Justice, the Mexico-based company accused Maple Leaf and several of its senior executives of “fraudulent and negligent misrepresentation” during the sale of Canada Bread. Grupo Bimbo stated it is pursuing damages or restitution for unjust enrichment, asserting that the misrepresentations resulted in significant financial losses. Maple Leaf has dismissed the claim as baseless.

Allegations of Misrepresentation

Grupo Bimbo acquired Canada Bread in May 2014 for C$1.83 billion, a transaction that Maple Leaf, as the majority shareholder, played a key role in facilitating. However, the claim alleges that Grupo Bimbo was unaware at the time of acquisition that Canada Bread and Maple Leaf were implicated in a price-fixing conspiracy involving commercial bread.

According to Grupo Bimbo’s statement, it was not until October 2017—three years after the acquisition—that it became aware of the alleged misconduct, which spanned from late 2001 to March 2015. The company contends that Maple Leaf’s assurances that Canada Bread was in compliance with legal and regulatory requirements were “false,” and this misrepresentation significantly influenced its purchase decision.

“The substantial acquisition price Grupo Bimbo paid for Canada Bread was predicated on Maple Leaf’s representations to Grupo Bimbo that Canada Bread operated in material compliance with all applicable laws,” Grupo Bimbo’s claim asserted.

Price-Fixing Investigation and Fallout

The Competition Bureau of Canada launched an investigation into bread price-fixing in January 2016, targeting major suppliers and retailers. The probe uncovered widespread collusion, eventually leading to a class action lawsuit. In June 2023, Canada Bread, under Grupo Bimbo’s ownership, agreed to a C$50 million settlement with the bureau for its role in the scheme.

Grupo Bimbo maintains that it incurred substantial financial losses as a result of Maple Leaf’s alleged misrepresentations, including the acquisition cost, investments made in Canada Bread, and expenses linked to the price-fixing investigation.

Maple Leaf’s Response

Michael McCain, executive chair of Maple Leaf Foods and one of the executives named in the lawsuit, described Grupo Bimbo’s claims as “an abuse of judicial process” and without merit.

“The Mexican company, Bimbo, is distracting attention from its own mismanagement of a Canadian business by asserting ridiculous claims which are not even consistent with its own prior admissions,” McCain said in a statement. He vowed that Maple Leaf would vigorously defend against what he characterized as a “frivolous action.”

Legal Battle Escalates

Grupo Bimbo’s lawsuit follows a related legal dispute. On November 21, Maple Leaf Foods filed its own claim against Canada Bread and Grupo Bimbo for defamation. The suit alleges that both entities made false and defamatory statements about Maple Leaf’s involvement in the price-fixing conspiracy.

This countersuit came after Canada Bread, in a September filing, accused Maple Leaf of using the company as a “shield” to avoid liability during the price-fixing investigation. Grupo Bimbo has stated its intention to hold those responsible for damages accountable.

Source: Supermarket Perimeter