Mexico’s Grupo Bimbo has filed a lawsuit against Maple Leaf Foods and former senior executives, seeking over C$2bn ($1.4bn) in damages linked to the sale of Canada Bread.
The so-called statement of claim by Grupo Bimbo filed in the Ontario Superior Court of Justice alleges “fraudulent and negligent misrepresentation” during the 2014 sale of Canada Bread, which was then majority-owned by Maple Leaf Foods.
At the time of the sale to Grupo Bimbo, Maple Leaf Foods held a 90% stake in Canada Bread, leading the negotiations and due diligence, according to a statement from the Mexico-based bakery giant.
The lawsuit follows an investigation by Canada’s Competition Bureau into alleged price-fixing within the commercial bread industry, implicating multiple firms, including Canada Bread.
Last year, Canada Bread admitted to price-fixing, pleading guilty to four charges and paid a C$50m fine.
Dismissing the Grupo Bimbo damages claims in its own statement, Maple Leaf Foods’ executive chair Michael McCain said: “This is an abuse of judicial process, without any merit whatsoever. 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.
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“To say we will defend against this frivolous action vigorously would be a colossal understatement. Maple Leaf Foods and its officers acted appropriately at all times, including with respect to making full, plain and true disclosure to Grupo Bimbo at the time of its acquisition of Canada Bread.”
The countersuit comes after Maple Leaf Foods filed a C$200m defamation suit against Grupo Bimbo and Canada Bread in November.
In the lawsuit, filed on 21 November in the Ontario Superior Court of Justice, Maple Leaf Foods alleged that Grupo Bimbo and Canada Bread had falsely accused Maple Leaf of using Canada Bread as a “shield” to evade responsibility in the bread price-fixing scheme.
The lawsuit alleges defamation, competition violations, and conspiracy related to the bread price-fixing scheme, along with C$10m in punitive damages.
The investigation into the bread price-fixing scandal dates back nearly a decade.
In 2015, the Competition Bureau of Canada initiated an investigation into allegations of price-fixing, involving Canada Bread, Weston Foods and supermarket chain Loblaw, both subsidiaries of George Weston.
Also implicated in the investigation were Maple Leaf Foods, as the former owner of Canada Bread, along with retail chains Metro, Sobeys, Wal-Mart Canada, and Giant Tiger Stores.
In December 2017, Weston Foods and Loblaw acknowledged their involvement in what they called an “industry-wide price-fixing arrangement”. In return for their complete cooperation with the Bureau’s investigation, they were granted immunity from prosecution.
In September this year, Canada Bread filed a lawsuit against Maple Leaf Foods, seeking damages for the fine it incurred in the price-fixing case.
It alleged that “Maple Leaf failed to act in accordance with the law and breached its management agreements with Canada Bread. From 1995 to 2014, as the controlling shareholder, Maple Leaf appointed directors to serve on the Canada Bread board of directors and positioned some of the most senior officers of Maple Leaf to operate Canada Bread and occupy the most senior executive role”.
The following month, an Ontario court dismissed a motion filed by plaintiffs for Canada Bread to have Maple Leaf Foods included in the class-action lawsuit related to the price-fixing scandal.
The plaintiffs aimed to overturn a December 2021 ruling by the Ontario Superior Court, which had excluded Maple Leaf Foods from the price-fixing case.
