Court File No. T-2117-17

FEDERAL COURT

PROPOSED CLASS PROCEEDING

BETWEEN:

(Court Seal)

ANDREW BALODIS

Plaintiff

and

GEORGE WESTON LIMITED; LIMITED; WESTON FOODS () INC.; WESTON BAKERIES LIMITED; MAPLE LEAF FOODS INC.; CANADABREA,D COMPANY, LIMITED; . LIMITED; INC.; METRO INC.; WAL~MART CANADA CORP:; and: GIANT TIGER STORES LIMITED.

Defendants

AMENDED STATEMENT OF CLAIM (Amended Pursuant to Rule 200 of the Federal Courts Rules)

TO THE DEFENDANTS:

A LEGAL PROCEEDINGHAS BEEN COMMENCED AGAINST YOU by the plaintiff. The claim made against you is set out in the following pages.

IF YOU WISH TO DEFEND THIS PROCEEDING, you or a solicitor acting for you are required to prepare a statement of defence in Form 171B prescribed by the Federal Courts Rules, serve it on the plaintiffs .solicitor, or where the plaintiff does not have a solicitor, serve it on the plaintiff, and file it; with proof of service, at a local office of this Court, WITHIN 30 DAYS after this statement of claim is served on you, if you are served within Canada. ·

If you are served in the United States of America, the period for serving and filing your statement of defence is 40 days. If you are served outside Canada and the United States of America, the period for serving and filing your statement of defence is 60 days.

Coples ofthe Federal Courts Rules, information concerning the local offices of the Court, and other necessary information may be obtained on request to the Administrator of this Court at Ottawa (telephone 613-992-4238), or at any local office. -2-

IF YOU FAIL TO.DEFEND THIS PROCEEDING, judgment may be given against you in your absence and without further notice to. you.

Date December 29, 2017 Issued by (Registry Officer) Address of local office: 180 Queen Street West, Suite 200 , M5V 3L6

TO: 22 St. Clair A venue East, Suite 800 Toronto, Ontario M4T 2S5

'AND TO: · LCJBLAW COMPANIES LIMITED · 22 St.. Clair Avenue East, Suite 800 . Toronto, Ontario M4T 2S5 ·.

AND To:· WESTON FOODS (CANADA) INC. 22 St. Clair A venue East, Suite 800 Toronto, Ontario M4T2S?

. AND TO: WESTON BAKERIES LIMITED . 22 St. Clair Avenue East, Suite 809 Toronto, Ontario M4T 2S5

AND TO: MAPLE LEAF FOODS INC. :1_ 6985 Financial Drive · · · ,Mississauga, Ontario L5N OAl

AND TO: COMPANY, LIMITED

10 Four· SeasonsI Place . Etobicoke, Ontario M9B QH7

AND TO: EMPIRE COMPANY LIMITED 115 King Street , BOK 1SO

AND TO: SOBEYS INC. 115 King Street Stellarton, Nova Scotia BOK 1SO

AND TO: METRO INC. 11011 Boulevard Maurice-Duplessis Montreal, HlC 1V6 - 3 -

AND TO: WAL-MART CANADA CORP. 1940 Argentia Road Mississauga, Ontario LSN 1P9

AND TO: GIANT TIGER STORES LIMITED 2480 Walkley Road Ottawa, Ontario KlG 6A9 - 4 -

CLAIM

1. The plaintiff claims on behalf of himself and the Class:

. (a) An order certifying this action as a Class proceeding pursuant to the.

Federal Courts Rules, and appointing the plaintiff as the representative

plaintiff for the Class;

(b) Damages or compensation, calculated on an aggregate basis or

...... otherwise,_in an amoun.1 nPUQ ~}(~~~c.!$~,~OQ,QQQ!Q9Q1 f()r breach of part VI of the Competition Act;

.· (c) Pre- and post"'judgment interest in ~ccordance with sections 36 and 37

of the Federal Courts Act;

(d) · Costsofbo~h the investig.ation and prosecution ofthe action, incl';lding

applicable taxes, on a. full or complete indemnity basis pursuant to

section 36 of the CompetitionAct and the Federal .Court$ Rules; and

( e) · Such further arid other relief as to this Honourable Court may seem

just.

NATURE OF THE ACTION

2. This case concerns the already notorious conspiracy among the major producerssuppliers and retailers of baked goods in Canada to fix the price of fresh commercial bread ("bread"). The conspiracy first came to light in December 2017 . - 5 -

when one of Canada's most esteemed companies.- Weston - publicly admitted to

participating in an industry-wide conspiracy to fix bread prices since 2001.

3. There may be no food more essential to sustaining human life than bread. It is

estimated that among everyone on earth, the average person obtains 30 percent of their

calories from wheat, the vast majority of those from bread. This rises to roughly 50

percent of all calories for the poorest people.

4. The conspiracy disproportionately impacted. those least able to afford the

. illegally increased bread prices. During the period of the price fixing conspiracy

· admitted. to by Weston, the Canadian market.for bread w~s over $25 billion dollars.

Toward the· latter end of the conspiracy, the average Canadian family was spending

·. over $450 per year on bread.

. . . 5. . The operati~n of the conspiracy and its impact on the Canadian public has · . . .· . . begun to be revealed by Weston's admissions and economic analysis. A~ Weston

admitted, the conspiracy "involved the coordination of and wholesa~e prices of .

·· certain packaged bread products," and "the participants regularly increased prices on a

coordinated basis."

6. . Economic analysis has revealed that during the Class Period, bread prices have

increased atby at least two-times the rate of what economic factors would predict. For

example, between 2006 and 2011, the value of bread sold in Canada grew at almost

double the rate of the volume of bread sold. And over the entirety of the Class Period,

the price of bread in Canada increased at double the rate of the price of food in general. -6-

7. This litigation is tailor-made for treatment as a class action because:

(a) it promotes judicial efficiency by avoiding the millions of claims that

would be required to achieve compensation for each Canadian harmed

by the conspiracy;

(b) it provides practical access to justice, as the cost to an individual of

litigating against these large corporations is out of proportion to each

individual's monetary claim; and

. ( c) · . it is the only practical d.eterrent to future conduct of this type, as it is the

orily mechanism to ensure thatthis type of economic crime does not

pay.

. . ' 8. This may be that rare case where all parties to the litigation should support a complete damage award of the entire ov~rcharge. The Class members obvimJsly support this result, as it means a recovery of money taken from them illegally.

9, The shareholders of the defendants, who assert ignorance of the illegal activities, count among them some· of the wealthiest.people in this country. These shareholders presumably do n<;>t want to be tainted by receipt or retention of illegally obtained funds, as was displayed by Weston's admission of wrongdoing.

10. Canadian society as a whole has an interest in ensuring that such admitted and illegal conduct is not rewarded. Oth~rwise, there is no effective deterrent to similar conduct in the future. - 7 -

THE PLAINTIFF AND THE CLASS

· 1 L The plaintiff, Andrew Balodis, is a resident.of Toronto, Ontario. During the

Class Period, Balodis purchased bread produced and sold by one or more of the

defendants .

. 12. The plaintiff seeks to represent a Class defined as:

All persons or entities in Canada who, from January 1, 2001 to the present (the "Class Period"), purchased fresh commercial bread (meaning packaged bread products and bread alternatives, including but not limited to bagged bread, buns, rolls, bagels, naan bread, English muffins, wraps, pita, and tortillas). Excluded from the Class are the defendants and their parent companies, subsidiaries, and affilhites.

THE DEFENDANTS

· ·· n. . Whenever reference is made t? any defendantentity, suchreference includes . . that .entity and its parent companies, subsidiaries, affiliates, predecessors, and

successors. In addition, whenever reference is made to any act, deed, or transaction of

· any entity, the allegation means that the entity engaged in the act, deed, or tr,ansaction

by or through its officers, directors, agents; employees, or representatives while they

were actively engaged in the management, direction, control, or transaction of the

entity's business or affairs,

14. Various other entities, persons, firms, and corporations, that are unknown and

not named as defendants, have participated as co-conspirators with the defendants and

have performed acts or made statements in furtherance of the conspiracy. The - 8 -

defendants are jointly and severally liable for the acts of their co-conspirators whether

named or not named as defendants in this claim.

Weston

15. The defendant George Weston Limited is a Canadian corporation with its head office in Toronto, Ontario. George Weston Limited owns and controls the defendants Lol;>law Companies Limited, Weston Foods (Canada) Inc., and Weston

. . ' Bakeries Limited. During the Class .Period, George Weston Limited .Produced and sold bread through its subsidiari.es.

16. As used herein, the term "Weston'' refers to the defendant George Weston

·Limited.

Loblaws

17. The defendant Loblaw Companies Limited is a Canadian corporation with its head office in Toronto, Ontario. It is a subsidiary of George Weston Limited. Lob law

Companies Limited is a grocery retailer with over 1,000 stores across Canada operati.ng urider banner Nlmes including , , Real Canadian ·

Superstore, Zehrs, , andothers. Lob law Companies Limited sold bread during the Class Period.

18. Throughout the Class Period, Lob law Companies Limited, .under the direction of George Weston Limited, directly participated in the conspiracy to increase the price of bread. ·George Weston Limited's management expressly directed Loblaw

Companies Limited to participate in the illegal price fixing conspiracy. George - 9 -

Weston Limited completely dominated and controlled Loblaw Companies Limited, and used Lob law Companies Limited as a shield for its illegal conduct.

19. As used herein, the term ''Loblaws" includes the defendants George Weston

Limited and Loblaw Companies Limited.

Weston Bakeries

20. The defendant Weston Foods (Canada) lnc. is an Ontario corporation with its

·head office in Toronto, Ontario. It is a subsidiary of George Weston Limited.· W~ston

Foods (Canada) Inc. is a producer and supplier of baked products. Weston Foods

(Canada) Inc. produced and sold bread during the Class Period ..

21. The defendant Weston Bakeries· Limited is a Canadian corporation with its

.head office in Toronto, Ontario. It is a subsidiary of George Weston Limited and is . . described as a business un:it of Weston Foods (Canada) Inc. Weston Bakeries Limited is a producer and supplier ·of fresh baked produc.ts ~under brand names ·iricluding

Wonder, D'Italiano, Country Harvest, Gadoua; Weston,. and others. Weston Bakeries

Limited produced and sold bread during theClass·Period.

22. Throughout the Class Period, Weston Foods (Canada) Inc. and Weston

Bakeries Limited, under the direction of George Weston Limited, directly participated in the conspiracy· to increase the price of bread. George W~ston Limited's management expressly directed Weston Foods (Canada) Inc. and Weston Bakeries

Limited to participate in the illegal price fixing conspiracy. George Weston Limited - 10 - completely dominated and controlled Weston Foods (Canada) Inc. and Weston

Bakeries Limited, and used them as a shield for its illegal conduct.

23. As used herein, the term "We.ston Bakeries" includes the defendants George

Weston Limited, Weston Foods (Canada)Inc., and Weston Bakeries Limited;

Canada Bread

24. The defendant M~ple Leaf Foods Inc. is a Canadian corporation with its head office in Mississauga, Ontario. Maple Leaf Foods Inc. specializes in food processing, \ ,, ,' ' ' ', ' ' ' ' ' and specifically protein, under. national brands including Maple Leaf; Maple Leaf

Natural Seleetions, and Schneiders. During the ClassPeriod, Maple Leaf Foods Inc. was a producer and supplier of baked products: Maple LeafFoods· Inc. produced and sold bread during the Class Period.·.

25. At the beginning of the Class Period, Maple Leaf Foods Inc. owned 68 percent of the shares of Canada Bread Company, Limited. Maple Leaf Foods Inc.· gradually increased its shareholdings in Canada Bread Company, Limited. By May 2014,when

Canada Bread Company, Limited.was sold to S.A.B. de C.V., Maple

Leaf Foods Inc~ owned 90 percent of Canada Bread Company, Limited's shares.

Throughout the Class Period up until May 2014, Maple Leaf Foods Inc. described

Canada Bread Company, Limited as its Bakery Products Group and treated it as an operational group within Maple Leaf Foods Inc.

26. The defendant Canada Bread Company, Limited is an Ontario corporation with its head office in Toronto, Ontario. Canada Bread Company, Limited is a - 11 -

producer and supplier of fresh baked products under brand names including Stonemill,

Villagio, Dempster's, Vachon, and others. Canada Bread Company, Limited

produced and sold bread during the Class Period ..

27. During the Class Period, Canada Bread Company, Limited, under the direction

of Maple Leaf F~ods Inc., directly participated in the conspiracy to increase the price

of bread. :Maple Leaf Foods Inc;'s management expressly directed Canada Bread

Company, Limited to participate in the illegal price fixing conspiracy'. · Maple Leaf

..F~ods Inc: compl~tely dominated and controlle'd Canada Bread Company, Limited,

and used Canada Bread Company, Limited as a shield for its illegal conduct. ·

28. As used herein, the term "Canada Bread" includes the defendants Maple Leaf

. Foods Inc. and Canada Bread Company, Limited. . l

So beys

29 ..· The defendant Empire Company Limited is a Nova Scotia corporation witJt

its head office in Stellarton, Nova Scotia. Empire Company Limited has two main

businesses: food retailing and related real. estate. Its food retailing oc'curs partly or

primarily through the defendant Sobeys Inc., which is its wholly owned subsidiary.

During the Class Period, Empire Company Limited sold bread through its subsidiaries

or affiliates.

30. The defendant Sobeys Inc. is a Nova Scotia corporation with its head office in

Stellarton, Nova Scotia. It is a subsidiary of Empire Company Limited. Sobeys Inc. is

a grocery retailer with over 1,500 stores across Canada operating under banner names - 12 -

including Sobeys, FreshCo, , , IGA, Price Chopper, Lawtons Drugs,

and others. Sobeys Inc. sold bread during the Class Period.

31. Throughout the Class Period, Sobeys Inc., under the direction of Empire

Company Limited, directly participated in the conspiracy to increase ·the. price of

bread. Empire Company Limited's management expressly directed Sobeys Inc.· to . . participate in the illegal price fixing conspiracy. · Empire Company Limited

compktely dominated and controlled Sobeys Inc., and used Sobeys Inc. as a shield for

its illegal conduct.

32. As used herein, the term "Sobeys" includes the defendants Empire Company

. . Limited and Sobeys Inc.

Metro

· 33. The defendant Metro Inc. is a Quebec corporation with its head office in

Montreal, Quebec. Metro Inc. is a grocery retailer with over 700 stores acrqss Canada

operating under banner names including Metro, , Marche, , and

others; Metro Inc. sold bread during the Class Period.

34. As used herein, the term "Metro" refers to the defendant Metro Inc.

Walmart

35. The defendant Wal-Mart Canada Corp. is a Nova Scotia corporation with its

head Ontario office in Mississauga. Wal-Mart Canada Corp. is a general retailer with - 13 -

over 400 stores across Canada. Wal-Mart Canada Corp. sold bread during the Class

Period.

36. As used herein, the term "" refers to the defendant Wal-Mart Canada

Corp.

Giant Tiger

37. The defendant Giant Tiger Stores Lim'ited is~ Ontario corporation with its

·.head office in Ottawa, Ontario. Giant Tiger. . Stores Limited is a discount retailer. with.

over 200 stores across Canada. Giant Tiger Stores Limited sold bread during the Class • • • J

Period .

. 38.. As used herein, the term "Giant Tiger" refers to the defendant Giant Tiger

· ·· Stores Limited.

THE INDUSTRY

The Bread Market

39. Bread is an essential food for the sustenance of human life and comprises

significant food sales in Canada.

40. It is estimated that of all people around the world, the average person obtains

30 percent of their calories from wheat, mostly from bread. This proportion rises to

roughly 50 percent of all calorie~ for the poorest people.

41. During the Class Period, the Canadian bread market was worth over $25

billion. The market ranged from an estimated $1.5 billion in the early part of the Class - 14 -

Period to an estimated $2.5 billion later in"the Class Period. In 2011, for example,

packaged bread sales in Canada were $2.2 billion, and sales for bread substitutes such

as crisp bread or snack breads were an additional $73 .1 million.

42. Bread is a staple in Canadian households. In 2016, the average Canadian

family spent an estimated $456 on brt'.ad, up from $405 in 2012.

43. The supply of bread at the wholesale level in Canada is controlled by Canada

Bread and Weston Bakeries. During the Class Period, Canada Bread and Weston

Bakeries had a combined market share ranging from 59.9 percentin 2001 to 83.8

percent in 2010. As of February 2016; CanadaBreadwas the largest supplierofbread

in Canada, with approximately 40 percent market share. Wesfon Bakeries was the

...... • second larg~st·supplier:\Vith approximately 38 percent of the market..

44. Can~dian bread sales are dominated by the defendant grocery chains, who

collectively control approximatelyover75 percent of the market. As of2016, Loblaws

comprised 335 percent, Sobeys 18.9 percent, Metro 15.5 percent, Walmart 8.8 . . . . percent, and Giant Tiger IA percent.As of January 2017, Lobla'fvs comprised 30

percent, Sobeys 25.7 percent, and Metro 10.5 percent. In 2015, Walmart held 7.8 .

percent of the market. Giant Tiger comprised the remainder of the defendants' share.

45. Bread sellers have faced stagnant or decreasing demand for bread because of a

variety of consumer trends. For example, there is an increasing shift away from wheat . .

and gluten products even by those w~o do not see adverse medical effects from their

consumption. Further, consumers are being more disciplined with their perishable - 15 -

food due to concerns about spending and waste, and are therefore taking steps to

ensure they are storing bread properly to make each bread item last longer.

The Market for Bread is Conducive to Price Fixing

46. Bread has commodity-like characteristics in that the bread product of one

seller is interchangeable with the bread product of another. It is therefore not

profitable for any one seller unilaterally to increase bread prices, because all things_

beirtg equal, that would allow competitors totake substantial market share by keeping

theirprices stable.

. . . 47. The bread industry in Canada is highly concentrated and domfoat~d by the

defendants, During the Class Period, Weston Bakeries and Canada Bread controlled a

) . substantial portion of bread productionover 75 percent of bread supply, and Lob laws,......

Sobeys, Metro, Walmart, and Giant t~ger controlled approximate)yover 75 percent of

.· retail bread sales.

48. During the Class Period, significant barriers to entry prevented potential

competitors from entering the bread industry in Canada. In particular, potential

entrants face substantial startUp costs, including large costs to develop facilities,

operations, marketing, and supplier networks ..

WESTON AND LOBLAWS ADMIT TO THE ·INDUSTRY-WIDE CONSPIRACY TO FIX BREAD PRICES

49. On December 19, 2017, Weston and Loblaws issued a press release publicly

admitting to participating in an industry-wide conspiracy to fix the price of bread. - 16 -

50. Weston and Loblaws.stated that beginning in 2001, they had a "role in an

industry-wide price-fixing arrangement involving certain packaged bread products."

51. Weston and Loblaws admitted further that the "arrangement involved the

coordination of retail and wholesale prices of certain packaged bread products," and

"the participants regularly increased prices on a coordinated basis."

52: The conspiracy impacted virtually the entire bread section of the grocery store.

The . bread products that were the object of the price fixing conspiracy ineluded .

packaged bread products and bread alternatives, includfo.g but not limited to bagged

· bread, buns, rolls, bagels, naan bread, English muffins, wraps, pita, and tortillas.

53. Weston stated that it participated in the price fixing conspiracy with another

major bread producer. Weston's bread producing subsidiary that participated in the

conspiracy was Weston Bakeries~ The other· major bread producer involved in the

conspfracy was Canada Bread.

·. 54. Loblaws also admitted to participating in the conspiracy with other big grocery

chains. The other grocery chains that participated in the conspiracy along with

Loblaws were Sobeys, Metro, Walmart, and Giant Tiger.

55. The Chairman and Chief Executive Officer of both Weston and Loblaws,

Galen G. Weston, admitted that the conduct was "wrong" and has "no place in our

business or Canada's grocery industry."

56. Weston and Loblaws have been cooperating with the Canadian Competition

Bureau in its investigation into the conspiracy to fix bread prices. - 17 -

57. Weston and Loblaws issued their press release only after documents from the

Competition Bureau's investigation became publicly available.

58. As a result of their cooperation with the Competition Bureau, Weston,

Loblaws~ and Weston Bakeries have been granted leniency and likely will not face

criminal charges.· or penalties. The other defendants have not been granted such

leniency.

. THE COMPETITION BUREAU INVESTIGATION

59. On December 18, 2017, the Ontario Superior Court of Justice unsealed search·

warrant documents executed by the Gomp~tition Bureau ii;i its investigationintothe

conspiracy to fix bread prices.

60. · The. search warrant documents illcluded affidavits froin Competition.Bureau

personnel describing the scope .of the Competition Bureau's· iilvestigation.

· 6 L The Competiti?n Bureau began its inquiry on August ll, 2017.

62. The purpose of the inquiry was:

to investigate allegations that Canada Br~ad, Weston Bakeries, LCL [Loblaws], Walmart, Sobeys,.Metro, Giant Tiger, and other persons known and unknown, partieipated in a conspiracy to fix the wholesale and retail price of fresh commercial.bread in Canada from the period in or around November 2001 to the pre~ent, the exact dates being unknoW'n.

63. According to the Competition Bureau, the allegations of bread price fixing

. would constitute violations of section 45 of the Competition Act. - 18 -

64. The Competition Bureau's investigation includes pnce fixing of "fresh

commercial bread," defined to include "packaged bread products and bread

alternatives (including 'bagged bread, buns, rolls, bagels, naan bread, English muffins,

wraps, pita and tortillas) for sale at retail."

65. . The Competition Bureau has searched at least 15 places of business belonging to the defendants, as part of its investigation: Weston (1 locati~m); Loblaws (1 location); Weston Bakeries (1 location); Canada Bread (1 location); Sobeys (3 locations); Metro (5 locations); Walmart (2 locations); and Giant Tiger (I location).

66. The Competition Bureau has also searched at least one location .of a third-party, Ovetwaitea Food Group, that was riot described to be a target of the investigation at the time of search.

,· 67. ·.· The investigation irtto bread price fixing has focused on a wide range of the bread market. The investigation has looked into the defendants' conspiratorial efforts to control pricing in the production supply of bread. The investigation has also looked

· into the defendants' conspiratorial, regular, a:nd coordinated increases in the price of bread charged to the public. The defendants' conspiratorial conduct in fixing bread production supply prices and increasing bread retail prices not only harmed Canadian bread buyers, but also artificially inflated the defendants' margins ..

OPERATION OF THE CONSPIRACY

68. On January 31, 2018, the Ontario Superior Court bf Justice unsealed additional · documents related to the Competition Bureau's investigation. - 19 -

69. The Competition Bureau investigation indicates that the dominant bread suppliers, the defendants Weston Bakeries and Canada Bread, conspired to increase the wholesale price of bread through communications between their senior officers.

70. The major retailers of bread, the defendants Loblaws, Sobeys, Metro,

Walmart, and Giant Tiger, conspired to increase the retail price of bread through communications between their senior officers.

71. All the defendants collectively met through communications between their senior officers and reached an industry-wide, conspiratorial agreement to increase both the wholesale and retail price of bread.

72. The defendants' conspiracy to increase the price of bread constituted a naked, horizontal price fixing conspiracy between the major suppliers of bread and the major retailers of bread.

73. The defendants implemented their conspiracy through a number of mechanisms, including what became known among the defendants as "the 7/10

Convention." According to the 7 /10 Convention, the defendants conspired to increase the price of bread by 7 cents per unit at wholesale, and by 10 cents per unit at retail, and by variations of the 7/10 Convention.

74. The conspiracy caused 15 or more increases in the price of bread during the

Class Period. The defendants collectively implemented conspiratorial price increases on at least the following occasions. The price increases are listed by supplier, but

involved the conspiratorial increase of both wholesale and retail bread prices: - 20 -

Weston Bakeries Canada Bread

l AQril 29, 2002 AQril 2002

~ November 3, 2002 November 3, 2002

J. March 21, 2004 Unknown

1 AQril 17, 2005 Unknown

J. February 5, 2006 Unknown

Q October 22, 2006 October 15, 2006

I October 21, 2007 Unknown

~ October 21, 2007 Unknown [a revision of the ,nrevious increase]

2. June 20, 2010 June 13, 2010 lQ March 27, 2011 February 1, 2011

11 March 27, 2011 Unknown

12 May 6, 2012 AQril 29, 2012

[not im12lemented] [not im12lemented]

.Ll. January 27, 2013 January 27, 2013 - 21 -

14 April 12, 2015 April 19, 2015

li March 6, 2016 February 28, 2016

75. Additional price increases occurred during and after those dates. Weston kept its cooperation with the Competition Bureau confidential, so the defendants continued to operate in an ongoing conspiracy at least until the end of 2017.

76. Further particulars of the conspiracy are provided in the Competition Bureau's search warrant documents, which are part of the public record, while still further details of the conspiracy will only be uncovered through discovery in this action.

ECONOMIC ANALYSIS BEGINS TO SHOW THE IMPACT OF THE CONSPIRACY ON THE CLASS

77. The conspiracy has had a devastating impact. Bread prices rose above competitive levels throughout the Class Period.

78. Economic analysis has begun to reveal that between 2006 and 2011, the value

of bread sold in Canada grew at almost double the rate of the volume of bread sold.

The compound annual growth rate ("CAGR") of the value of sales of packaged and

industrial bread was 5.1 percent over this period, whereas the CAGR for retail volume

was 2.6 percent. For bread substitutes, the CAGR for the value of sales was 4.7

percent, whereas the CAGR for volume of sales was 2.9 percent.

79. During the entire Class Period, the price of bread in Canada has increased at a

rate twice that of the price of food in general. During that time, the average price of -22 - . bread has almost doubled, that is, has increased by approximately 100 percent. In comparison, the Consumer Price Index for food in Canada shows an increase in general food prices of approximately 50 percent over the same timeframe.

80. The effects of the conspiracy can be further seen by comparing the increases in the price of bread with increases in the input costs of bread and bread increases in the

United States. For example, the price of bread rose more than the price of milled flour.

The price per loaf rose twice as fast in Canada than in the United States, even though

Canada and the United States generally follow the same food price trajectory (other than for particular Canadian supply-managed foods like dairy and eggs).

81. In addition, Weston and Loblaws admitted that the price fixing participants

"regularly increased prices on a . coordinated basis," and that there was an

"overcharge" in connection with the price fixing conduct.

82. These price increases would not have been possible in a competitive market and in the face of stagnating demand. Absent the conspiracy, any defendant initiating such price increases would have lost market share.

83. The defendants' conspiracy to fix the price of bread increased the prices for all packaged bread products and bread alternatives, including but not limited to bagged bread, buns, rolls, bagels, naan bread, English muffins, wraps, pita, and tortillas.

DISCOVERABILITY AND FRAUDULENT CONCEALMENT

84. The plaintiff and Class members reasonably considered this industry to be operating in accordance with the law. A reasonable person in the circumstances of the - 23 - plaintiff or Class members would not have been alerted to investigate the lawfulness of the pricing for bread.

85. The plaintiff and other Class members did not discover, and could not have discovered through the exercise of reasonable diligence, the existence of the conspiracy before filing this claim.

86. The defendants actively, intentionally, and fraudulently concealed the existence of the conspiracy from the public, including the plaintiff and Class members.

The defendants represented to customers that their pricing activities were unilateral, thereby misleading the plaintiff and the Class. The acts of the defendants alleged herein, including all acts in furtherance of the conspiracy, were fraudulently concealed and carried out in a manner intended to preclude detection.

87. The defendants' conspiracy was self-concealing. Because the defendants' activities were kept secret, the plaintiff and Class members were unaware of the unlawful conduct until the filing of this claim and did not know they were paying supracompetitive prices for bread during the Class Period.

BREACH OF THE COMPETITION ACT

88. The defendants conspired, combined, agreed, or arranged:

(a) to prevent, limit, or lessen unduly the manufacture or production of

bread;

(b) to enhance unreasonably the price of bread; -24-

(c) to prevent or lessen unduly competition in the production,

manufacture, purchase, barter, sale, storage, rental, transportation, or

supply of bread; and

(d) to otherwise restrain or injure competition unduly.

89. The defendants conspired, agreed, or arranged:

(a) to fix, maintain, increase, or control the price for the supply of bread;

(b) to allocate sales, territories, customers, or markets for the production or

supply of bread; and

(c) to fix, maintain, control, prevent, lessen, or eliminate the production or

supply of bread.

90. The defendants implemented a foreign directive; instruction, intimation of policy, or other communication, which communication was for the purpose of giving effect to a conspiracy, combination, agreement, or arrangement entered outside

Canada that, if entered in Canada, would have been in contravention of section 45 of the Competition Act.

91. The acts of the defendants described herein are in breach of sections 45 and 46 of part VI of the Competition Act.

92. The defendants' conduct caused loss and damage to the plaintiff and the Class. - 25 -

93. The defendants are jointly and severally liable to pay damages to the plaintiff

and the Class, as well as the full cost of the investigation, pursuant to section 36 of the

Competition Act.

DAMAGES

94. As a result of the defendants' conspiracy, the price of bread was unreasonably

increased to artificially high and non-competitive levels, and competition in the sale of

bread was unduly restrained.

95. During the Class Period, the plaintiff and Class members purchased bread for prices higher than they would have paid in the absence of the illegal conspiracy. As a result, the plaintiff and Class members suffered damages.

96. The overcharge to the plaintiff and Class members is the difference between

the price actually paid as a result of the conspiracy and the price that would have been

in place in the absence of the conspiracy.

97. The overcharge is capable of being quantified on an aggregate basis, and the

amounts payable to the Class in respeqt to damages may be calculated on an aggregate

basis pursuant to section 334.28 of the Federal Courts Rules. - 26 -

PLACE OF TRIAL

98. The plaintiff proposes that this action be tried in Toronto, Ontario.

Date: February 9, 2018 December 29, 2017 365 Bay Street, Suite 200 Toronto, ON M5H 2Vl James c. Orr LSO# 19895V [email protected] Tel:. (416) 360-1488

Kyle R.Taylor ·LSO# 71469R [email protected] Tel: (416)360"1175

Annie (Qurrat-ul-ain)Tayyab LSO# 68287L atayyab@agmla\yyers.com Tel: (416) 360-5707

.. Tel: (416) 360~2800 . Fax: ( 416) 360-5960

Lawyers for the Plaintiff CourtFileNo. T-2117-17 FEDERAL COURT PROPOSED CLASS PROCEEDING Proceeding commenced at TORONTO

BETWEEN:

ANDREW BALODIS

Plaintiff

- and-

GEORGE WESTON LIMITED; LOBLA W COMPANIES LIMITED; WESTON FOODS (CANADA) INC.; WESTON BAKERIES LIMITED; MAPLE LEAF FOODS INC.; CANADA BREAD COMPANY, LIMITED; EMPIRE COMPANY LIMITED; SOBEYS INC.; METRO INC.; WAL-MART CANADA CORP.; and GIANT TIGER STORES LIMITED

Defendants AMENDED STATEMENT OF CLAIM (Amended Pursuant to Rule 200 of the Federal Courts Rules)

(FILED this 29•h day of December, 2017)

AFFLECK GREENE MCMURTRY LLP 365 Bay Street, Suite 200 Toronto, ON M5H 2Vl

· James C. Orr LSO# 19895V [email protected] Tel: (416) 360-1488

Kyle R. Taylor LSO# 7 l 469R ktay [email protected] Tel: (416) 360-1175 Annie (Qurrat-ul-ain) Tayyab LSO# 68287L [email protected] Tel: (416) 360-5707

· Tel: (416) 360-2800 Fax: (416) 360-5960

Lawyers for the Plaintiff