A major lawsuit has been filed against Maple Leaf Foods Inc. over the sale of Canada Bread Company.
Grupo Bimbo is seeking over $2 billion in damages from Maple Leaf and certain senior officers and directors of the company for alleged “fraudulent and negligent misrepresentation” or “restitution for unjust enrichment” during the Canada Bread sale process.
The Mexico-based multinational food company acquired Canada Bread from Maple Leaf Foods in 2014. On Friday, it issued a statement of claim in the Ontario Superior Court of Justice against the Canadian packaged meats and food production company.
According to the Mexican food processing company, when the producer and distributor of packaged bread products was sold to Grupo Bimbo, Maple Leaf was the 90 per cent owner, controlled Canada Bread, and led the transaction negotiations and diligence process.
In an email statement, Maple Leaf Foods Executive Chairman Michael H. McCain, one of the execs named in the lawsuit, said that it is “an abuse of judicial process without any 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,” he stated.
“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.”
Other current and former senior officers named in the lawsuit include Michael Vels, Richard Lan, Rocco Cappuccitti, and Stephen Elmer.
In 2017, the Competition Bureau investigated Canada Bread for price fixing in the commercial bread industry.
The packaged bread producer was fined a massive $50 million in 2023 after pleading guilty to its role in one of the largest price-fixing scandals in Canadian history.
Canada Bread admitted that it colluded with its competitor, Weston Foods, to increase prices for various bagged and sliced bread products, such as sandwich bread, hot dog buns, and rolls. The price fixing resulted in two price increases, one in 2007 and one in 2011.
According to the Competition Bureau of Canada, Canada Bread was owned by Maple Leaf Foods at the time of price fixing. The senior leadership responsible for implementing price fixing is no longer with the company.
Grupo Bimbo claimed that it only learned about the price-fixing incident in 2017. At the time, the company said that it was considering all legal options against those responsible for the issue.
The guilty plea resulted from the Bureau’s ongoing investigation into alleged price fixing between producers to raise wholesale bread prices and between grocery stores to raise retail prices.
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