Bread Price Fixing

Seven bread manufacturing companies agreed to increase the bread prices at a fixed rate for fourteen years. This initiative was an initiative that would stop or discourage competition that is always supposed to exist in the market as stated in the competition law. The agreement between the seven companies covered all the wheat products that they manufacture. Since bread is their primary commodity, it got the most significant effect of this collusive scheme. The time that they wanted this scheme to run secretly is so long in that the lack of competition among these companies would have had a significant effect on the bread market in the company.

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Loblaw bread company and George Weston Ltd which is her mother company brought this scheme by the seven bread manufacturing companies. The two companies brewed the whistle and admitted to having participated in the plot to raise the prices of bread at a standard rate for the agreed duration of fourteen years. The information the two companies provided acted as a revelation to what would have been a catastrophe to the consumers (Karton, 2018). The plot would have seen to the bread companies robbing innocent consumers of billions of money in each of the fourteen years they planning to have the scheme running. The two companies, therefore, made the government discover the collusive by the seven companies.

When Loblaw and Weston came to light with what was happening behind the curtains, the competition bureau took the initiative to investigate the matter and gather enough evidence to stage a prosecution in court. The bureau filed a case in the court accusing these companies of this plot to undermine the consumers. The companies, however, argued with the judge to put the case on hold until the supreme court of Canada finished with another price-fixing case that was in progress.

Solution

The immunity and Leniency programs are one of the most effective platforms for unearthing and stopping illegal conduct that tends to violate criminal provisions for the competition act. The bureau detects, investigates, and prosecutes unlawful act related to market competitions. This bureau is the body that Loblaw and Weston alerted on the collusive of the seven bread manufacturing companies.

In a market environment where there is no competition, the producing companies reap benefits in terms of price and service with the consumers receiving no benefits. The costs of commodities remain high, and since all the suppliers are selling at the same rates, the consumer lacks a choice. This state makes them buy the goods they want at high market prices since they are the same everywhere (Kerber, 2016). The competition act and immunity in Canada set up the protection and leniency program bureau to investigate such unlawful activities to protect the consumers from exploitation by manufacturers and suppliers.

For the case of bread price fixing in Canada, the bureau investigated the claims as Loblaw and George Weston companies had reported and found them guilty of the accusations. Loblaw and Weston got their charges dropped, but the bureau sued the other five companies. They faced the charges of bread price fixing. The companies hired a representative to represent them on the case, and after arguing with the judge, the court agreed that they were not facing charges at present. The court later postponed the trial to a later date to allow the completion of a similar case that was going on in the court.

References

Karton, J. (2018). Piecemeal Solutions to Demonstrated Problems of Unfairness: Control of Price Terms in Common Law Canada. Control of Price Related Terms in Standard Form Contracts (Springer, 2019). Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3283503

Kerber, W. (2016). Digital markets, data, and privacy: competition law, consumer law, and data protection. Journal of Intellectual Property Law & Practice, 11(11), 856-866. Retrieved from https://academic.oup.com/jiplp/article/11/11/856/2335247