Loblaw, George Weston under fire for bread price-fixing scheme response

Loblaw Companies Ltd.'s attempt to mitigate potential damage from an investigation into an alleged industry-wide bread price-fixing scheme through its admission of guilt and gift card offering has been met with backlash from skeptical consumers and indignant competitors alike.

Loblaw and its parent company George Weston Ltd. revealed Tuesday they alerted the Competition Bureau after discovering a 14-year-long bread price-fixing arrangement. As a gesture of good will, Loblaw is offering customers a $25 gift card that can be used at its grocery stores across Canada.

"This conduct should never have happened," CEO Galen G. Weston said Tuesday.

"The gift card is a direct acknowledgment of that to our customers. We hope that they'll see it as a meaningful amount that demonstrates our commitment to keeping their trust and confidence."

Concerned over details

However, some early visitors to the sign-up page have expressed concern that the bare bones site looks like a phishing attempt by savvy scammers.

The site, which went live Tuesday, did not initially include text about user privacy and the company's use of the email addresses it collects. It has since been updated to "to make the limited use of the email addresses more explicit to users," spokesman Kevin Groh told The Canadian Press on Thursday.

The addition came after several visitors expressed concern on social media over details — or lack thereof — available on the site.

The site displays a logo that simply says "Loblaw" rather than the company's full name typically pictured in its logo. It has a banner photo of a piece of bread and several sentences of text with instructions on when registration will open. The page lacks any links or a copyright symbol that's found on many other sites affiliated with the company.

"It just looks like a Wordpress site that in theory anyone could have done," Cameron Kennedy of Toronto told The Canadian Press.

It's likely Loblaw was in a rush to make the site available to the public, said Hasan Cavusoglu, an associate professor at the University of British Columbia's Sauder School of Business in Vancouver.

It would be better if it had a design similar to the company's other sites, a URL connected to the company's main website, and if the company's main site linked to the gift card one, he said.

Wary of scammers

Kennedy remains concerned that scammers will try to purchase similar domains and could easily create knock-off versions to trick some unsuspecting consumers into first divulging their email addresses and then more sensitive things, like their credit card information, in a follow-up confirmation email.

It's a definite possibility someone might attempt that, said Cavusoglu.

But Loblaw's Groh said the company is taking proactive steps to prevent that, such as acquiring similar URLs and re-directing them to the correct site.

Still the corporate handout seems to have done little to stave off class-action lawsuits, one of which was launched two days after the company's apology.

An anti-poverty activist from Ontario is the lead plaintiff in a class-action filed Thursday seeking $1 billion in damages from Loblaw, George Weston and the other five companies under investigation. The suit has not yet been certified and none of the claims have been proven in court.

It's likely Loblaw will argue anyone who redeemed the $25 gift card should have that amount subtracted from any possible damages awarded, said Jean-Marc Leclerc, a lawyer with Sottos LLP and co-counsel in the case.

"We will argue that the gift card program that Loblaws is proposing doesn't provide anywhere near the appropriate level of compensation that people deserve in this case," he said, noting the gift card funds aren't much of a hit to Loblaw as the cards can only be redeemed at their stores.

Compensation could take years

Groh said accepting the gift card would not affect customers' right to participate in a class action, but noted getting compensation in situations like this can take many years, while Loblaw's card will be available more immediately.

Loblaw's apology and admission Tuesday has also been met with derision from its major grocery rivals Sobeys and Metro, who accuse it of implicating them in its admitted illegal activities by referring to the arrangement as "industry-wide."

Sobeys and Metro, in addition to Canada Bread, Walmart and Giant Tiger were also named in affidavits filed by the Competition Bureau in seeking search warrants to gather evidence for the investigation.

But both Metro and Sobeys have denied any wrongdoing.

Loblaw and George Weston's statement "was unfair, unsubstantiated, and quite possibly defamatory," wrote Sobeys CEO Michael Medline in a letter to Weston dated Thursday.

He said Weston misled the Canadian public and threw many other retailers under the bus while addressing its own actions and securing an immunity deal.

"We will be closely monitoring the impact of your words on our brand, our business results and our legal rights," he said. "We will hold you responsible for any damages we may incur due to your actions."

Metro echoes Medline's outrage, said spokeswoman Marie-Claude Bacon.

"Metro is not pleased with Loblaw making Metro appear guilty by association. It is unacceptable," she said.

The company finds it disturbing that Loblaw is allowed to flood the market with gift cards to salvage their reputation even as they admitted wrongdoing, she said.

"We will monitor the situation closely."

Groh said Loblaw stands by its statements.