Category: Economy

Metro grocer denies being involved in a cartel style bread price fixing scheme  in the country and strongly contradicts allegations by the Competition Bureau that it accuses other food players of inflating prices over a period of 14 years old.

“To date, there is nothing that allows us to conclude that we have violated the Competition Act,” Metro spokeswoman Marie-Claude Bacon told the “Journal de Montréal” on Wednesday.

However, in legal documents released Wednesday, the Competition Bureau claims that at least seven companies, including Loblaw (including Provigo), Sobeys (including IGA), Metro (including Super C), Wal-Mart and Giant Tiger would have committing criminal acts under the Competition Act by fixing bread prices for more than 14 years. According to the Competition Bureau, the process also involves the two largest bread producers in Canada, Canada Bread and Weston Bakeries.

In meetings between bread producers and grocers, “retailers would have agreed to raise prices, provided that their competitors do the same,” says the Competition Bureau.

According to Metro, “internal audits” did not uncover any irregularities in the sliced ​​bread pricing process in its subsidiaries and employees.

contestation

Metro intends to vigorously challenge the Competition Bureau’s charges in court. “The legal process will continue,” Bacon said.

At Canada Bread, it was argued Wednesday that “the allegations do not reflect the Canada Bread we know.”

Last December, Loblaw and Weston, who belong to the same group, caused a surprise by acknowledging that they had participated in a bread cartel for 14 years.

Loblaw and Weston got immunity in exchange for their cooperation. The other five companies indicated that they were cooperating with the survey managers.

To apologize, since the beginning of January, Loblaw has been offering customers $ 25 gift cards redeemable for grocery products.

Class Action Requests

Many class action lawsuits have since been filed against major grocery chains in court.

“It’s disappointing to see so many players possibly involved in this cartel. It’s clear that consumer confidence in these big players in food will suffer, “believes Dalhousie University professor and food policy expert Sylvain Charlebois.

Some of the brands of bread involved in the cartel

Canada Bread

– Villagio

– Good morning

– Pom

– Ben’s

– Stonemill

Weston Bakeries

– Weston

– Italiano

– Gadoua

– Country Harvest

Although there is no economic or political law according to which workers should equally and consistently share the benefits of economic growth, the share of labor income in GDP has steadily declined since the 1960s. The share of labor income is at its lowest level since the Second World War, while income inequality continues to grow.

Just look at the components of Canadian GDP. GDP is, in a way, a paycheck for Canada that is broken down into two parts. One part is “paid” to workers in the form of income, the other part is paid to companies (and their shareholders) in the form of capital. Since the 1970s, the share of GDP devoted to “labor income” has declined steadily, from 59.9% in 1976 to 53.3% in 2015.

The same effect is visible when looking at real wage growth-it has almost stagnated for all except for the highest incomes. In short, Canadians’ incomes grow less quickly than the companies that hire them, giving the impression that growth is reserved for businesses and the wealthy.

However, inequalities are not the cause, they are a symptom. Many recent debates on the causes of inequality highlight a growing concentration among producers of monopoly prices in seller’s markets; or automation and mechanization that displace workers. Yet, the cause of inequality could be elsewhere.

In fact, recent research shows another side of the coin: consolidation among employers could also make a decisive contribution to slowing wage growth and increasing income inequality.

If there are only two employers in the labor market, for example, they do not have to be as competitive looking for employees.

This reduced competition for workers gives these companies “monopsony” powers in the labor market.

In such a market, workers are more likely to “accept” the working conditions offered by employers, and these companies do not have to worry about losing their workers to competing employers.

This lack of competition in the job market allows companies to pay a lower wage than would prevail in a competitive market. It also gives rise to income inequalities between workers – favoring higher wages for those with bargaining power (eg those who are more educated or those who are more mobile).

It is interesting to note that the best way to “repair” these inefficiencies related to monopsony power in the labor market is simply to raise the minimum wage.

In the case where the number of potential employers is limited – or too concentrated – minimum wage increases do not detract from employment (a criticism often made by those who oppose it).

These increases simply require employers to pay more for their workers. Indeed, recent studies show that minimum wage increases have not had a negative impact.

Of course, the ultimate impact of minimum wage legislation is an open question, but data to date shows that these increases do not torment employment. Perhaps raising the minimum wage is an effective way of ensuring that workers get a better and more equitable share of the economic benefits of their work, while fighting against rising inequality.