Mexico’s Grupo Bimbo has filed a lawsuit against Maple Leaf Foods and former senior managers, seeking more than C$2 billion ($1.4 billion) in damages related to the sale of Canada Bread.
Grupo Bimbo’s so-called statement of claim, filed in the Ontario Superior Court of Justice, alleges “fraudulent and negligent misrepresentation” during the 2014 sale of Canada Bread, 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 and thus led the negotiations and due diligence, according to a statement from the Mexico-based baking giant.
The lawsuit follows an investigation by the Canadian Competition Bureau into alleged price fixing within the commercial bread industry, involving multiple companies, including Canada Bread.
Last year, Canada Bread admitted price fixing, pleaded guilty to four charges and paid a C$50 million fine.
Michael McCain, executive chairman of Maple Leaf Foods, dismissed Grupo Bimbo’s damages claims in his own statement: “This is an abuse of process without any merit. Mexican company Bimbo is diverting attention from its own mismanagement of a Canadian company by making ridiculous claims that are not even consistent with its own previous admissions.
“To say that we will vigorously defend ourselves against this frivolous action would be a colossal understatement. Maple Leaf Foods and its officers acted appropriately at all times, including in relation to providing complete, clear and truthful information to Grupo Bimbo at the time of the Canada Bread acquisition.”
The countersuit comes after Maple Leaf Foods filed a C$200 million defamation suit against Grupo Bimbo and Canada Bread in November.
In the lawsuit, filed Nov. 21 in the Ontario Superior Court of Justice, Maple Leaf Foods alleged that Grupo Bimbo and Canada Bread falsely accused Maple Leaf of using Canada Bread as a “shield” to avoid responsibility in the scheme for to avoid fixing bread prices. .
The lawsuit alleges defamation, anticompetitive violations and conspiracy in connection with the bread price-fixing system, along with $10 million in damages.
The investigation into the bread price scandal dates back almost ten years.
In 2015, the Competition Bureau of Canada launched an investigation into price-fixing allegations involving Canada Bread, Weston Foods and supermarket chain Loblaw, both subsidiaries of George Weston.
Also involved 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.
