In a landmark settlement, Loblaws and Weston agreed last week to pay $500 million to customers harmed by the bread cartel in which these food giants were involved between 2001 and 2015. Although the sum paid by the two monopolists is the largest ever recorded in such a settlement, several experts are skeptical about its possible impact.

According to Guillaume Tremblay-Boily, a researcher at Quebec's Institut de Recherche et d'Informations Socioéconomiques (IRIS), this sum is not much of a deterrent. In fact, in the last quarter alone, Loblaws posted profits of $459 million. The damages they will pay therefore account for, at most, a quarter of their annual profits.

In a press release issued on July 30, five days after the settlement, Galen Weston praised his company's increased sales in the food sector and "Loblaw's commitment to providing outstanding value and service", which he said had been "recognized by our customers".

Over the 14 years that it remained in the shadows, the mafia-like scheme involving Loblaws and Weston enabled them to extort almost $5 billion from workers across Canada.

But even more striking for Tremblay-Boily is the fact that this settlement avoids tackling the very thing that made this scam possible:

"Beyond the settlement, given the high concentration of the market, companies will be able to continue setting prices, especially considering that in order to have Loblaws' cooperation, the Competition Bureau has undertaken not to pursue criminal charges."

In Canada, there are real oligopolies in the grocery sector. Five companies together own three-quarters of the market. They can impose their conditions on the entire market with impunity. Indeed, the Competition Bureau must rely on their cooperation if it is to gain access to their data for its investigations.

Tremblay-Boily explains the effect this market concentration has on food prices. "A company can simply pass on price increases to its consumers. At that point, it would be considered a perfectly legal practice. But if a major company like Loblaws does it, obviously, the price it sets is likely to become the new market standard."

"So at that point, situations like the ones that have come to light with the bread pricing issue, it's in a way the tip of the iceberg."

This market concentration gives the industry's big players an inordinate amount of power. At present, the Competition Bureau is investigating another practice used by Loblaws and Sobeys to increase their market share: exclusivity clauses in commercial leases.

In a nutshell, the practice consists of signing leases in shopping centers with clauses that prevent other food companies from setting up shop in the same location. This ensures a local monopoly.

The result of these practices in an uncontrolled market: the scale of profits earned by large companies like Loblaws and Sobeys is steadily increasing out of all proportion. In 2023, profits in the food sector will amount to $6 billion, while in 2019, profits stood at $2.4 billion.