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Legal threat over bread fix

George Weston Ltd. and Loblaw Companies Ltd. "should keep checking the mailroom" for upcoming legal action after they implicated Sobeys Inc. in an alleged industry-wide bread price-fixing scheme that goes "right to the heart of the trust" between Canadians and their grocers, the CEO of the grocery chain said Thursday.

"I have been in way too many meetings with lawyers," said Michael Medline, CEO of Empire Company Ltd. and Sobeys. The meetings have ramped up since Wednesday, when court documents containing the nature of the allegations were made public, he added.

"We are assessing all of our options," he said. "I'm not going to tip our hand in terms of what our entire strategy is, but I think Weston (and Loblaw) should keep checking the mailroom."

Kevin Groh, a Loblaw spokesman who is also speaking on behalf of parent company George Weston, did not respond to Medline's comments directly.

"The Competition Bureau — a federal investigator — has publicly concluded it has evidence that seven companies have committed a criminal offence. This is the bureau's investigation not ours," he said in a statement.

In December, bakery operator George Weston and retailer Loblaw admitted their participation in what they say is an industry-wide arrangement to co-ordinate the price of bread for at least 14 years.

They brought the information to the Competition Bureau in exchange for immunity from criminal proceedings, sparking the watchdog's ongoing investigation into an alleged cartel composed of the two informants, as well as Canada Bread Company Ltd., Walmart Canada Corp., Sobeys Inc., Metro Inc. and Giant Tiger Stores Ltd.

Walmart has declined to comment, while the others have denied contravening the Competition Act.

Documents released Wednesday related to the investigation alleged a more than decade-long arrangement to bump prices at least 15 times in a pattern that became colloquially known as the 7/10 convention — seven cents more at wholesale and 10 cents for consumers in stores.

The information to obtain documents contained the Competition Bureau's reasoning for requesting search warrants in the case based on information it had collected so far in its investigation, largely gathered from interviews with two witnesses.

While their names are blacked out, the records indicate they are affiliated with the immunity applicant of George Weston and Loblaw. An unidentified applicant had requested their anonymity, which has been granted while the court waits to hear the full application. Other sections, including one detailing the genesis of the allegations, are also redacted.

Sobeys and Metro have both filed applications for unredacted versions that disclose the names to the public, and a hearing will be held on Feb. 14.



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