Proactive Investors - Loblaw ({{TSX:L) and its parent company George Weston (TSX:WN) have agreed to pay $500 million to settle a class action lawsuit regarding the grocery chain’s involvement in bread price-fixing.
The plaintiffs alleged that between 2001 and 2015, a group of companies including Loblaws and the Weston companies, Metro (TSX:MRU), Walmart (NYSE:WMT) Canada, Giant Tiger and Sobeys and its owner Empire Company (TSX:EMPa) Limited engaged in a price-fixing conspiracy which artificially raised the prices of packaged bread.
In a press release, George Weston said it would pay $247.5 million in cash and Loblaw would pay $252.5 million, comprising $156.5 million in cash and credit for $96 million already paid to customers under its Loblaw Card program.
The funds will be distributed to eligible persons per a plan of distribution to be approved by the courts.
“On behalf of the Weston group of companies, we are sorry for the price-fixing behaviour we discovered and self-reported in 2015. This behaviour should never have happened,” George Weston CEO and Loblaw president Galen Weston said in a statement.
“Reaching a settlement on this matter was the right thing to do in response to previous behaviour that did not meet our values and ethical standards.”
The group of lawyers representing the plaintiffs said the $500 million settlement is the largest anti-trust settlement in Canada’s history.
"This is a significant milestone in Canadian class action history and sends a strong message that conduct that harms consumers will not be tolerated," said Jay Strosberg, managing partner at Strosberg Wingfield Sasso LLP.
Jim Orr, partner at Orr Taylor LLP, added: “Importantly the settlement provides access to evidence to be used in pursuing the case against the remaining defendants. The expectation is that this will result in further significant monetary recovery for Canadian consumers."
Loblaw’s Toronto-listed shares traded lower on Thursday morning, down 1.5% at about C$166, after it was revealed the company’s second quarter profits took a $121 million hit due to the bread price-fixing class actions.