Below is 1 chart that tells you why Canadians pay an extra 56 cents on each loaf of bread. Originally posted on Linkedin, May 2023.
[June 21, 2023 update: one of the colluders, Canada Bread, was fined $50 million by the Ontario Superior Court]
[July 25, 2024 update: George Weston Ltd. & Loblaw Cos. Ltd. settle for $500 million to settle 2 class-action lawsuits. The other accused companies are still in play.]
Notes and references are under the PDF below.
The main takeaway is that bread prices never went down to their normal level after the price-fixing was discovered – 6 years after the Competition Bureau raided the Cartel’s offices, Canadians are still overpaying for bread.
Notes on the data and calculations
The source of most data is Canada’s CPI (Consumer Price Index) visualization tool. The CPI is a basked of goods – each month, people from Statistics Canada records the prices of basic staple goods that each household buys, across the country.
The prices in the CPI are “indexed” to the year 2002 – it means that we take the price of all basic goods the way they were in 2002 and say that this price is our “100” starting line. So, if something used to cost $50 in 2002 and then the price rose to $60 in 2003, the “index” version of this price will be 100 in 2002, and 120 in 2003 (The $10 rise from $50 to $60, is the same as a 20% rise from 100 to 120). In this way we’re only looking at prices relative to 2002 and we’re not focusing on the dollar figure of the price.
For the chart, I chose to export the “Index” figure, all across Canada. I used the parent category “Food purchased from stores” to indicate price for “All Groceries”. I used the “Bread, rolls and buns” to refer to the price of Bread.
If you play around with the categories, you can compare other products’ price rise relative to Bread (which we know was – and is still – being manipulated). A great comparison is the price of “Cookies and Crackers”. This product is subjected to the same cost pressures as bread – it takes labour, wheat, salt, sugar etc. to produce both bread and cookies. Yet, without price-fixing in this category, the gray line below tracks in line with the cost of all other groceries.
To figure out just how much more we’re still paying on every loaf due to the price-fixing (56 cents), I followed this process:
- Figure out the nominal price for bread (675grams) in 2001, the year when the collusion just started. Let’s assume this is the pre-collusion price. The nominal price is the dollar figure, as opposed to the 100-based “indexed” value.
The nominal prices for bread and other products are available from Statistics Canada here (Table 18-10-0002-01).
The data is freely available and is downloadable. - Average out the monthly price figures over the whole year of 2001.
Pre-collusion price: $1.42 - Return to the CPI and calculate the actual percent increase in all Bread prices from 2001 to 2002. The bread index went from 96 to 204.6 in that period. So a 113% increase. This is the price increase driven by price-fixing.
- Calculate the actual percent increase in All Groceries between 2001 and 2022. In that period, the index rose from 97.5 to 169.5. A 74% increase. This is how much Bread would’ve increased without price-fixing (ie. the general rate of increase on all food)
- Take the pre-collusion bread price of $1.42 and multiply it by the actual price-fixed increase of 113%. You get a “current” 2022 price of $3.02 per loaf for consumers.
- Now, in an alternative universe without price-fixing, we would take the base bread price of $1.42 and it would rise by 74% (the same rise as all groceries). This would land us with a “current” 2022 price of $2.46 per loaf.
- Compare $3.02 to $2.46, and you get a $0.56 collusion tax that we are still paying to Loblaws, Sobeys and Metro in 2022 (and 2023 – I used 2022 figures because we have full-year data for it)
Useful resources
Timeline of the crime:
- Price-fixing agreement starts in “late 2001”
- Loblaws rats out their co-conspirators in March 2015
(https://www.cbc.ca/news/business/competition-bureau-bread-price-fixing-1.4512332) [archive link] - Despite going to authorities in 2015, the price-fixing would’ve continued right up until the raids in 2017. Because Loblaws needed to pretend like they are still part of the conspiracy:
https://www.ctvnews.ca/canada/bakers-grocers-involved-in-16-year-price-fixing-conspiracy-competition-bureau-1.3783528 [archive link] - Oct. 31, 2017 – Competition Bureau raid with warrants (https://vancouversun.com/news/local-news/watchdog-raids-offices-of-grocery-retailers-in-price-fixing-probe) [archive link]
- In 2022, still no action for the price-fixing. Nobody has been brought to justice:
https://www.cbc.ca/news/business/bread-price-fixing-loblaw-1.6719884 [archive link] - June 2023 – Canada Bread, one of the colluders, got fined $50 Million for their role [archive link]. Of course, nobody went to jail. (Updated after this post was published in 2023)
Here is an analysis of the additional costs that regular Canadians pay due to the price-fixing (although it has a mistake around the nominal price of bread in 2015):
https://macleans.ca/economy/economicanalysis/14-years-of-loblaws-bread-price-fixing-may-have-cost-you-at-least-400/ [archive link]
A mention of potential added meat price-fixing, in this solid writeup of the Bread price-fixing scandal by The Tyee. [archive link]
