Money Bread price scandal sparks immunity debate

01:26  02 february  2018
01:26  02 february  2018 Source:   msn.com

Bakery to offer free bread in exchange for bread price-fixing $25 gift cards

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CALGARY - The national bread price-fixing scandal has sparked heated debate over the Competition Bureau's immunity granting program, with a law enforcement expert defending the practice and a government accountability critic arguing it just lets offenders get away with crimes.

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Bakery wholesaler George Weston Ltd. and subsidiary grocer Loblaw Companies Ltd. were granted immunity from prosecution in return for their co-operation in the price-fixing investigation under a long-standing bureau program that grants freedom from sentencing to the first party in a cartel who volunteers to co-operate.

According to court documents released Wednesday, the bureau alleges that senior officers at George Weston and rival Canada Bread Co. Ltd. communicated to raise prices in lockstep, then met with five national bread retailers who agreed to implement the higher prices.

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"If you have an effective whistleblower program and you have the resources to be doing effective best-practice inspections and audits, then the immunity program just amounts to letting one of the violators off the hook. And that's a bad idea," Duff Conacher, co-founder of Democracy Watch, said in an interview.

Conacher said the Competition Bureau's immunity program offers an offending company an escape route if it becomes aware that its violations are about to be exposed — for example, if a disgruntled employee threatens to do just that.

He said the bureau would be better off if it provided sufficient compensation and better protection for whistleblowers to offset their significant personal risk of losing their jobs or being taken to court.

The immunity program was employed in 2007 when Cadbury Adams Canada Inc. agreed to provided details of a chocolate price-fixing conspiracy in return for avoiding prosecution.

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The investigation resulted in criminal charges against three companies and three individuals, and one of the companies, Hershey Canada Inc., subsequently pleaded guilty and was fined $4 million in 2013.

"The bureau’s immunity and leniency programs offer powerful incentives for organizations and individuals to come forward and co-operate with the bureau’s investigations, and have proven to be among our best weapons to combat criminal cartels under the Competition Act," the bureau stated in 2015 as it announced charges had been stayed against the rest of the defendants.

Senior investigator Sandy Boucher of accounting firm Grant Thornton LLP said being able to offer immunity is a vital tool in crime-fighting, citing his experience in his current role, as well as during 12 years as a street cop and narcotics officer with the Hong Kong police force in the 1980s and '90s.

"If you are trying to investigate and prosecute people involved in conspiracy, there really isn't a better way to do it than to get a co-operating insider," he said.

a close up of a cage© Provided by thecanadianpress.com

"And that applies to organized crime or narcotics, any kind of conspiracy. The most effective way is, No. 1, to get someone to blow the whistle ... or No. 2, to do a deal with somebody who is a member of the conspiracy."

Bakers, grocers met to fix bread prices: Competition Bureau

  Bakers, grocers met to fix bread prices: Competition Bureau Senior officers at Canada's two largest bakery wholesalers communicated directly to raise prices in lockstep, then met with five retailers, who accepted the hike on condition their competitors would as well, the federal competition watchdog alleges in court documents released Wednesday. The Competition Bureau believes wholesalers Canada Bread Company Ltd. and George Weston Ltd., as well as grocers Loblaw Companies Ltd., Walmart Canada Corp., Sobeys Inc., Metro Inc. and Giant Tiger Stores Ltd. committed indictable offences under the Competition Act, according to the previously sealed information to obtain documents.

Boucher said he finds it frustrating when a member of a conspiracy or cartel gets off "scot-free" but pointed out that often, evidence of a conspiracy can only be provided by someone who was in the room when the parties were conspiring.

Conacher said Canada should emulate U.S. government agencies which reward whistleblowers with a percentage of recovered funds for reporting wrongdoing.

He praised the Ontario Securities Commission for its program adopted in 2016 to pay whistleblowers up to $5 million if they report information that leads to fines or voluntary payments of $1 million or more.

But he said it's impossible to tell if the Competition Bureau's immunity program is working because it's unknown how many cases would have been reported anyway under a stronger whistleblower program.

Boucher, however, pointed out that paying someone to provide evidence also raises ethical issues.

According to the Competition Bureau's website, an applicant under its immunity program can request an “immunity marker” as confirmation that it is the first party to make a request with respect to "criminal anti-competitive activity" involving a product or business.

"The marker guarantees the applicant’s place at the front of the line, subject to the applicant meeting all of the other criteria of the immunity program," the bureau says, adding only one party or one set of affiliated parties can qualify.

Once the marker is granted, the applicant has a limited period of time, usually 30 calendar days, to provide a detailed statement called a "proffer" describing the illegal activity, its effects in Canada and the supporting evidence, the bureau says.

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