From fixing the price of baked goods to grander schemes for swindling the public, it always comes back to the dough
Earlier this year, Loblaw Cos. Ltd. offered customers $25 gift cards as recompense for the grocery retailer’s part in a price-fixing scandal. The product involved was bread. This is not corny slang referring to the thing at the heart of every price-fixing scandal, but the actual, sliced, sandwich necessity.
Last November, Loblaws was named in a proposed $1-billion class action suit alleging the company conspired with Wal-Mart Canada Corp., Sobeys Inc., Giant Tiger Stores Ltd., and bread makers Canada Bread Co. and George Weston Ltd., among others, to fix the price of bread—to pump up the pumpernickel, monetize the multi-grain, leverage the leaven, boost the bagels, plunder the Wonder. Consumers who lost dough are sour.
Even without the puns, this is just sad. Price-fixing isn’t what it used to be. Whatever happened to plots like, say, cornering the market for silver? Now, that was a scheme, back when schemers were schemers and had three names. In the 1970s, Nelson Bunker Hunt and W. Herbert Hunt attempted to create a silver monopoly and reap huge profits. The brothers Hunt and their partners briefly managed to hoard 77 percent of global silver supplies before U.S. government regulators stepped in and ruined their plan. Curses, (silver) foiled again. They may have failed, but at least they dreamed and schemed big. Can’t see the Hunts or J.P. Morgan or Daddy Warbucks wasting time trying to corner the market on hamburger buns.
There have been many price-fixing schemes over the years. One of them even starred Matt Damon, eventually. That was the attempt by American conglomerate Archer Daniels Midland Co. and several international firms to fix the price of the animal feed additive lysine in the 1990s. The plan resulted in prison sentences for three ADM executives and was detailed in the book The Informant: A True Story by Kurt Eichenwald, later made into the Steven Soderbergh–directed movie The Informant! with Damon in the lead role. It is widely considered the greatest film ever made about lysine price-fixing or, if this is not going too far, about lysine itself.
Cinematic glory aside, the ADM lysine plot does suggest that your everyday price-fixer usually focuses not on an obvious consumer staple like bread but on an obscure item further up the production stream. If you’re going to fix prices, the thinking surely goes, why not do it with something almost no one has heard of?
If, on the other hand, you try to fix prices on a product that millions care deeply about—and already suspect is overpriced—you’re flying into thunderclouds. In 2007, British Airways was fined £121.5 million by U.K. regulators and $300 million by the U.S. Department of Justice for collaborating with Virgin Atlantic Airways Ltd. to fix fuel surcharge prices. Virgin Atlantic was not fined. Why not? Because those Virgin birds turned stool pigeon. The airline was granted immunity for revealing the plan. We can assume investigators got a Virgin Atlantic Airbus into a windowless room and said, “Your BA buddy is right next door, singing like a 308-seat canary. Cut a deal with us first, and maybe you can fly the coop.”
It surely surprised no one to hear that airlines might be colluding on fees. When looked at from that angle, you’d have to say, why not give it a try? People are going to hate you anyway, so to paraphrase the old saying, you might as well be hanged for fixing the price of a sheep as a lamb.
The same holds true of oil companies. If you did an informal poll of motorists on the May long weekend, you could expect a solid majority to say there’s something sketchy going on at the pumps. In this case, playing it straight seems like a wasted opportunity. Why not just go ahead and create the conspiracy everybody assumes? They’re going to blame you for it anyway. But then, nobody ever calls me back for a second interview when those oil company CEO jobs come open.
As for bread, it may be doomed. The price-fixing scandal has come at a bad time for bakery products—this once-beloved foodstuff has recently been reclassified as a delivery device for that deadly human poison, gluten. Opposed by Gwyneth Paltrow and an army of influencers, bread will soon be made to answer for the rising toll of toast-related fatalities. Perhaps you should spend your $25 on some raw water instead. Does Loblaws carry that yet?