Editor’s Note:
On October 25, 2024, Justice E.M. Morgan of the Ontario Superior Court of Justice issued a judgment that validates Michael McCain’s comments regarding the lawful nature of the emails that have been produced in these proceedings, finding that they reflect routine communication between a supplier and a customer.
Below are two excerpts from that judgment (bold emphasis added):
“…the Canada Bread Documents do not support the existence of the conspiracy alleged by the [Competition] Bureau, or by the plaintiffs in the Class Action. “Rather, what those records relate to is Canada Bread, a producer/wholesaler of packaged bread, speaking with Metro and Loblaw, two supermarket retail chains. Even if an executive of MLF [Maple Leaf Foods] as owner of Canada Bread is speaking on the bread producer’s behalf, what each of the records shows is a producer/wholesaler talking price with its customer, a retailer. That is hardly an improper or shocking business practice…[F]or a wholesaler to discuss its prices with a retailer, or a producer with a supermarket customer, is ordinary business” (paragraphs 64-65);
and
“On its face, at least…there is nothing conspiratorial or anti-competitive about these communications. They show two businesses, one of which sells products to the other, discussing price. That is not a conspiracy; it is the legitimate way that business is conducted. An email showing a seller and a buyer, in effect, negotiating a price for the goods being sold and bought, is about as un-shocking a piece of evidence as one could find in the commercial world…The smoking gun, therefore, turns out to be a harmless replica” (paragraphs 66-67).
Original Blog:
I am Michael McCain, former CEO and now Executive Chair of Maple Leaf Foods. We have been making food for generations of Canadians and are pursuing a vision to be the most sustainable protein company on earth. Everything we do at Maple Leaf is firmly rooted in our values. This requires that we act lawfully, responsibly and with integrity.
I am proud of our company and our industry. Yet trust in the food industry, and now in our company, has been called into question with respect to pricing practices. In the current environment, given the toll that inflation, particularly rising food prices, is having on consumers, I can understand why some are looking to find someone or something to blame. Trust is a fragile matter. Consistent with our history, I want to be clear and fully transparent by addressing recent headlines suggesting that Maple Leaf Foods or me personally, may have condoned or participated in alleged price fixing activities at Canada Bread that date back 15 to 20 years.
The headlines have referenced an internal email sent on my behalf in 2007 as evidence that I was involved in some sort of pricing conspiracy. I am deeply concerned at how my words have been misconstrued and misunderstood in a way that has contributed to some people questioning their trust in our industry and in our company.
While lawyers have urged me to remain silent because of potential future litigation, that is simply not in my nature. I am compelled to set the record straight — to share, in my words, what the email was and what it wasn’t.
Let’s start with what the email was. It was a note sent to some members of the executive teams at both Maple Leaf Foods and Canada Bread when we were a shareholder. I was relaying a conversation that I had with a senior executive of a retail customer regarding a range of business activities, including category strategies, that the customer thought had been successful. My practice was to spend as much time as I could speaking to customers about strategy.
What does this mean? The activities described in the email reflect basic category management, a very common practice used for decades in all food and consumer packaged goods businesses in Canada and elsewhere. Retailers expect their suppliers to provide value by making recommendations on how to effectively merchandise their products. Category management includes a combination of product innovation, stocking, product mix, placement, displays, promotional strategies and pricing, to maximize consumer experience, sales, profitability and operational efficiency. It is a routine and lawful part of retail merchandising.
Talking about “pricing” or “managing category profit up” does not mean that something illegal was happening. At the end of the day, while a supplier like us can make recommendations, every retailer makes its own decisions on what it is going to sell, how it is going to sell those products, and the prices it charges. It is a highly competitive environment.
Here is what the email was not. It was not a communication with any competitor, it did not describe a communication with a competitor, and it was not about price fixing or any other kind of unlawful activity in any category.
When we make mistakes, we own up to them. If we do something wrong, we stand up and take responsibility. I have read and re-read the email (and hundreds of similar ones), reflected on the conversations surrounding it, and I can say unequivocally that it had nothing to do with price fixing. It had everything to do with trying to run a profitable business that supports our customers, engages consumers, and delivers the food people need.
As for Canada Bread, what I can say with confidence is that the allegations simply do not line up with what I observed while we were a shareholder, nor do they line up with what we found in our records. We continue to believe that the pricing practices of Canada Bread were responsible, consistent with industry practice, and above all, lawful.
This gives rise to the obvious question as to why some companies have chosen to admit guilt when we see no evidence of wrongdoing. Candidly, we don’t know the answer. We weren’t contacted or consulted about the plea arrangements that others have made, nor were we given the opportunity to respond. We do know that these types of investigations incentivize parties to admit guilt in order to reduce or eliminate their legal or financial exposure. We do not know why other companies made the admissions they did, and we can only lean on our own experience and investigation of the facts. We see nothing to support claims of unlawful behaviour and will defend allegations to the contrary as vigorously as humanly possible.
