Court File and Parties
COURT FILE NO.: CR-23-90000422-0000 DATE: 20230621 ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
HIS MAJESTY THE KING - and - CANADA BREAD company, limited
Counsel: François Blanchette, Gary Caracciolo and Sébastien Lafrance, for the Crown J. Thomas Curry, Eli Lederman and Nikolas DeStefano, for Canada Bread Company, Limited
HEARD: June 21, 2023
M. Forestell J.
Reasons for Sentence
Background
1Canada Bread Company, Limited (“Canada Bread”) has entered guilty pleas to four offences: two counts of violations of paragraph 45(1)(c) of the Competition Act as it existed in 2007; and two counts of violations of paragraph 45(1)(a) of the Act as amended in 2010.
2The circumstances of the offences are set out in detail in the Statement of Agreed Facts filed on this hearing.
3Briefly stated, Canada Bread has admitted that on a total of four occasions in 2007, in 2010 and in 2011 it entered into agreements with Weston Food Canada Inc. to increase wholesale fresh commercial bread prices to grocery retailers. The conduct resulted in two price increases.
4Other relevant facts set out in the Statement of Agreed Facts in this case are as follows:
Bread is a dietary staple for many Canadians (as opposed to a more discretionary or luxury purchase) and is purchased by nearly all Canadian households.
Canada Bread's annual sales for its fresh bakery product category for calendar year 2007 were $945.9 million, and for the calendar year 2011 were $1.087 billion. Fresh Commercial Bread comprises the majority of the fresh bakery product category, however fresh bakery is not limited to Fresh Commercial Bread and therefore fresh bakery annual sales figures are higher than the annual sales figures for Fresh Commercial Bread alone.
The offences involved a high degree of planning and coordination by the Former Senior Officer and one or more senior executives of Weston to facilitate the arrangements described in this Statement of Agreed Facts, including communicating directly about effectuating the offences, as described above. The Former Senior Officer initiated the contact with one or more senior executives at Weston to arrive at the arrangements.
[O]n May 23, 2014, the shares of Canada Bread were sold to Grupo Bimbo for a purchase price of $1.83 billion. At that time, the Board of Directors of Canada Bread recommended that the shareholders approve the transaction and Maple Leaf (which owned 90% of the common shares of Canada Bread) voted in support of the transaction. Despite asking questions about commercial practices and compliance with laws and regulations affecting the business, Grupo Bimbo was not told that Canada Bread had participated with Weston in the making of arrangements to increase the wholesale price of Fresh Commercial Bread. The Former Senior Officer left Canada Bread promptly after the company was acquired by Grupo Bimbo in 2014.
Prior to Grupo Bimbo's acquisition in 2014 and at the time of the offences, Canada Bread did not have an independent legal and compliance department responsible for its commercial and market practices; Canada Bread's legal and compliance functions had been directed by senior management of Maple Leaf. In 2018, Canada Bread appointed a senior in-house counsel with responsibility for, among other things, legal and regulatory compliance, and developing and implementing a competition law compliance and training program for Canada Bread that has been shared with the Bureau.
Canada Bread has cooperated with the Bureau from the outset of its involvement in this matter and its cooperation has continued throughout the period of the Bureau's investigation. It has responded to requests from the Bureau and provided Bureau investigators with documents over and above those seized in the search of Canada Bread. Canada Bread has also made nine witnesses available for interviews by the Bureau.
Joint Submission on Sentence
5Counsel have proposed a joint submission on sentence. That joint submission is for a total fine of 50 million dollars, allocated as follows: 7.5 million dollars on each of Counts 1 and 2 and 17.5 million dollars on each of Counts 3 and 4.
6The sentence is proposed by experienced counsel and is the result of pretrial discussions between counsel who are aware of the circumstances of the offences and the strengths and weaknesses of the prosecution case and the circumstances of the offending company. It is also the result of judicial pre-trial discussions with me.
7The Supreme Court of Canada, in R. v. Anthony-Cook, 2016 SCC 43, quoting from the earlier case of R. v. Nixon, 2011 SCC 34, observed that “not only do joint submissions ‘help to resolve the vast majority of criminal cases in Canada’, but "in doing so, [they] contribute to a fair and efficient criminal justice system" (para. 47).
8The Supreme Court went on to say that “a trial judge should not depart from a joint submission on sentence unless the proposed sentence would bring the administration of justice into disrepute or is otherwise contrary to the public interest.”
9I have concluded that the proposed sentence would not bring the administration of justice into disrepute, nor is it contrary to the public interest.
10I have carefully considered the circumstances of the offences and of the offender and I have concluded that the sentence proposed is consistent with the applicable sentencing principles.
Sentencing Principles
11In arriving at this conclusion, I have considered the leniency programme of the Competition Bureau; I have considered the general purposes, principles and objectives of sentencing as set out in the Criminal Code, R.S.C., 1985, c. C-46, and I have considered the principles and objectives of sentence arising from the common law.
12The leniency program is a program whereby a person can obtain total immunity from prosecution or leniency or partial relief from fines. The program encourages participants to admit to the offending conduct and to cooperate with the investigation by the Competition Bureau. The program provides a benefit to the public by encouraging cooperation with the authorities and serving as a deterrent to other offenders. Much of the conduct would go undetected if not for the cooperation of participants in the program.
13In accordance with the established practice under the program, the Bureau in this case calculated the quantum of the fines that would otherwise have been sought, assessed the cooperation of Canada Bread, and arrived at a recommended discount of approximately 30%.
14This process underlies the ultimate recommended sentence that has been proposed to me. My role is to assess whether that proposed fine is consistent with the relevant sentencing principles and objectives. The cooperation of the offender is a factor that I take into account in this determination, but I do not engage in a mathematical exercise in assessing the adequacy of the fine in the context of the relevant sentencing principles.
15The fundamental principle of sentencing set out in s. 718.1 of the Criminal Code and as set out in the caselaw is that the sentence should be proportionate to the gravity of the offence and the degree of responsibility — or the moral blameworthiness — of the offender.
16The assessment of the gravity of the offence and the moral blameworthiness of the offender in the context of a corporation involves the consideration of some factors that are specific to the sentencing of an organization.
17In imposing a sentence on an organization, s. 718.21 of the Code requires that I take into account any advantage realized by the organization, the degree of planning and the duration and complexity of the offence, whether the organization has attempted to conceal its assets, the impact of the sentence on the economic viability of the organization, the cost to public authorities of the investigation and prosecution, any prior similar conduct by the organization and any measures taken by the organization to reduce the likelihood of it committing a subsequent offence.
18I must also impose a sentence that advances the purpose or objectives of sentencing. The fundamental purpose of sentencing is to contribute to respect for the law and maintenance of a just, peaceful and safe society by imposing just sanctions that advance one or more of the relevant sentencing objectives. The relevant sentencing objectives in this case are the denunciation of the conduct and the harm done to the victims or the community, deterrence of the offender and others, rehabilitation of the offender and the promotion of a sense of responsibility and acknowledgment of the harm done to victims and to the community.
Gravity of the Offence and Circumstances of the Offender
19The offences in this case were extremely serious. Price-fixing was aptly described in R. v. Maxone Auto Parts, 2012 FC 1117 at paragraph 54 as analogous to fraud and theft. Effectively, this was a fraud on the public. The offences had a far-reaching and long-standing impact on the victims. Bread is a dietary staple for many and these offences affected millions of consumers.
20Other aggravating factors are that there was a high degree of planning and coordination by the former senior officer of Canada Bread and that the company realized an advantage as demonstrated by the sales levels during the relevant time periods.
21There are, however, mitigating factors in relation to this offender. There has been no effort to conceal assets or avoid the consequences of the conduct. The shares in Canada Bread were sold to Grupo Bimbo after the commission of the offences. There is no history of similar conduct. It is an agreed fact that the current owner and directing mind of Canada Bread has a reputation for ethical conduct. Since the change in ownership, Canada Bread has developed and implemented a competition law compliance and training programme thus taking measures to reduce the likelihood of it committing similar offences.
22Canada Bread has fully cooperated with the investigation. This is a highly mitigating factor. It has saved considerable time and costs. In addition to the time and resources saved in the investigatory stage, the guilty pleas entered today come at a time when these courts are overburdened with a backlog of serious criminal cases from the COVID-19 pandemic and at a time when judicial resources are particularly scarce. The pleas have avoided a lengthy trial at a time when court resources are severely strained.
23The guilty pleas also represent an acknowledgement of the harm done to the public. Canada Bread, through its pleas, has taken responsibility for the conduct.
Objectives of Sentencing
24In arriving at an appropriate sentence, I must also consider the objectives of sentencing.
25Denunciation and deterrence are the predominant sentencing objectives in sentencing for price fixing.
26To achieve these objectives, the fines imposed in these cases must be at a level that eliminates the profit of the conduct. The fine cannot merely represent the “cost of doing business”.
27I am satisfied that the aggregate fine recommended in this case is significant and achieves the objectives of deterrence and denunciation. While reduced from the maximum, the reduction is not inconsistent with the relevant sentencing principles. It achieves deterrence and denunciation while recognizing the cooperation of Canada Bread in the investigation, its acknowledgement of the harm done, and the very significant steps taken to prevent a recurrence of the conduct.
28The recommended fines in my view are consistent with the principles and objectives of sentencing.
Disposition
29Therefore, I impose the sentence recommended by both parties:
(1) a fine of $7.5 million on each of Counts 1 and 2; and (2) a fine of $17.5 million on each of Counts 3 and 4.
There will be 30 days to pay.
Forestell J.
Released: June 21, 2023