Maple Leaf price fixing allegations investigated

19 December, 2008

Canada Bread Company, the parent company of the UK’s biggest bagel supplier Maple Leaf, is investigating allegations that an employee at its UK bakery operations, Maple Leaf Bakery, may have sought to influence the pricing of a competitor, Mr Bagel. These allegations have led to the suspension of the employee, while an investigation is carried out with the support of external legal counsel.

Lynda Kuhn, senior vice president, communications and consumer affairs at Canada Bread told British Baker: “We certainly see these as serious allegations and we’re treating them as such. We’re proceeding very quickly to understand the facts and would like to resolve the issue as soon as possible.”

When asked how long the investigation was likely to take, Kuhn said “it would premature and unfair to speculate on the conclusions of the investigation, but we’ve certainly made it clear they are serious allegations and it is certainly not how we operate this company.”Canada Bread, which is 89.8% owned by Maple Leaf Foods, entered into negotiations to acquire Mr Bagel in October this year, and the main terms of the transaction had been agreed upon in principle, claims the firm. “However the asking price changed materially at a very late stage in the process and at that point the negotiations broke off,” explained Kuhn, “and subsequently this incident occurred”.According to a report in The Mirror newspaper, an executive at North London-based Mr Bagel, secretly filmed a meeting in which the Maple Leaf employee appears to urge his competitor to raise prices. Mr Bagel then contacted the Office of Fair Trading with allegations of price fixing.According to a statement released by Canada Bread: “Consistent with normal acquisitions process, the company had received detailed information from Mr Bagel under the terms of a confidentiality agreement and was involved in intensive due diligence, which appears to have extended to the discussion of pricing strategies to be implemented after the acquisition. Negotiations ceased in early December when Mr Bagel sought to significantly raise the selling price of the business late in the process.”Richard Lan, president and CEO of Canada Bread, commented: “We have been operating under the premise that we were in the late stages of acquiring this business. While these allegations are unproven, they are serious, and we are taking all precautionary steps to fully investigate this matter and determine the facts.”Kuhn added that so far the company has not experienced any negative effects from the allegations in respect to its relationship with its customers. A spokesperson from The Office of Fair Trading (OFT) told British Baker that “it would never get into individual discussions on individuals and whether we are investigating or not. We consider all complaints, but beyond that we do not go into any detail.”Manufacturers Maple Leaf Bakery, based in Rotherham, supplies around 85-90% of ambient bagels in Britain.Mr Bagel manufacturers and supplies frozen bake-off and ambient bagels to the retail and foodservice markets.Check out the link for the official statement released by Canada Bread:http://investor.mapleleaf.ca/phoenix.zhtml?c=189491&p=irol-newsArticle&ID=1233301&highlight=



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