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Take Loblaw’s Hush Money, But Don’t Keep Quiet

The bread price-fixing scheme is a moment when the curtain is pulled back and we get a peek into how things really work.

01/08/2018 10:42 EST | Updated 01/08/2018 14:28 EST

In December, Loblaw executives announced they'd become aware of a price-fixing scheme involving their company and others. From late 2001 to March 2015, bread wholesalers and major grocery chains coordinated to increase bread prices in unison, making it more difficult for working class families in Canada to get the most basic staple on their table.

Starting Monday, you can register and potentially become eligible to receive a $25 gift card from Loblaw, a measure they say they implemented in order to help rebuild trust. You should take advantage of this program, but don't trust Loblaw or other companies involved in the scheme.

Chris Wattie / Reuters

Corporations care about profit, not customers

In their announcement, Loblaw claimed they reported the price-fixing scheme as soon as they became aware of their role in it.

This raises a few questions: How many employees were involved? Was it the same group of employees over the 14-year period? How did they avoid getting caught for so long? Why would mid-level employees, as opposed to top executives, have any interest in the price-fixing scheme? How can we believe upper management was not aware of this arrangement, which involved coordination with other corporations?

Unfortunately, these questions may never be answered, because, according to Loblaw CEO Galen G. Weston, "As a result of the co-operation we have provided to the Competition Bureau, neither George Weston Ltd. nor Loblaw or their respective employees will face criminal charges or penalties."

The $25 gift card also doesn't do nearly enough to cover damages.

The penalties of price-fixing can include being imprisoned for up to five years, and/or being required to pay fines of up to $10 million. With this in mind, the decision to expose what some Loblaw employees had already known about for over a decade likely wasn't motivated solely by a sense of goodwill, even if that was the primary factor.

The $25 gift card also doesn't do nearly enough to cover damages. Many people in Canada could wander into their local Loblaw affiliated chain at any time during the period stated, pick up a loaf and be the victim of a multi-corporation scheme when they were rung through the cash. This process was quick. But in order to get any of this back, we have to jump through hoops. And real justice? If it ever comes, it will take years.

It's nearly impossible to repair the damage done to Canadians, as I'm sure many Loblaw executives know, but revamping their brand is possible. That's what's at work here.

The market is not a solution

Capitalists often say the market, guided by an "invisible hand," works to ensure the consumer and worker aren't taken advantage of by corporations, as shoppers across Canada have been.

The opposite is true: there isn't a strong enough central state, so corporations run wild. They then use their power to bend the few rules in place in their favour. The result isn't a free market, but one controlled by the wealthy and powerful for their benefit, as we've seen in this case.

More from HuffPost Canada:

There are more serious examples.

Canada has lax tax obligations for corporations and the rich, which supporters believe are essential in order to keep them in the country. The rich then use their influence to take full advantage of tax loopholes and havens in order to avoid paying these limited taxes.

Loblaw registered two offshore corporations in Bermuda and Barbados in 2005.

The result: Canada is losing between an estimated $6 billion and 7.8 billion in taxes per year from the ultra-rich, while working-class families who do not have the means or desire to game the system pay their full bill. Meanwhile, workers' jobscontinue to be cut and outsourced, with benefits slashed and even paid breaks eliminated.

It's worth noting that Loblaw itself, which was named in the Panama Papers, registered two offshore corporations in Bermuda and Barbados in 2005. Since then, according to the CBC, they have been "​used​ ​to​ ​hold, invest,​ ​and​ ​pay​ ​profits​ ​on​ ​tens​ ​of​ ​millions​ ​of​ ​dollars​ ​collected​ ​from​ ​holders​ ​of​ ​the​ ​President's Choice​ ​Financial​ ​MasterCard​."

The market does not prevent the consumer from being scammed, but rather enables it while offering the illusion of fairness.

Charity is never enough

Capitalists state that charity should make up for this discrepancy. Yet it never does, and it shouldn't be expected to either.

In this case, since the news of the announcement, well-meaning pundits have suggested Canadians should obtain the gift card, and then pass it on to food banks.

There is nothing wrong with the idea, but it reveals a lot: capitalists take advantage of the system, as corporate executives at Loblaw and other corporations have, and then responsibility for the cleanup is shifted to the less fortunate via charity, through popular pressure in this case. In the best-case scenario, corporate executives — who overcharge and under-pay — give a fraction of what they should be paying in taxes back to charity in order to give the illusion of good will.

Charity is not the answer. Instead, we must build a system with a central purpose of looking out for those with the least, instead of one that bends to those with the most.

Don't mistake this bread-fixing scheme as just the work of a few employees, one company, or a group of corporations. Instead, perceive it is a moment when the curtain is pulled back and we get a peek into how things really work.

Take Loblaw's hush money, but don't keep quiet about what you're seeing.