Grupo Bimbo has filed a lawsuit against Maple Leaf Foods and former senior executives for CAD$2 billion (US$1.4 billion), alleging “fraudulent and negligent misrepresentation” during the sale of Canada Bread in 2014. 

Maple Leaf Foods’ executive chair Michael McCain refutes Grupo Bimbo’s claims in a statement shared with Food Ingredients First.

“This is an abuse of the judicial process without any merit whatsoever. The Mexican company, Bimbo, is distracting attention from its own mismanagement of a Canadian business by asserting ridiculous claims, which are not even consistent with its own prior admissions.”

“To say we will defend against this frivolous action vigorously, would be a colossal understatement. Maple Leaf Foods and its officers acted appropriately at all times, including with respect to making full, plain and true disclosure to Grupo Bimbo at the time of its acquisition of Canada Bread.”

According to Grupo Bimbo, Maple Leaf led the transaction negotiations and subsequent diligence processes. At the time of the sale, the Canadian multinational owned approximately 90% of the outstanding common shares of Canada Bread.

The Mexican company notes in a statement of claim filed in the ontario Superior Court of Justice that following the sale, Canada Bread was investigated by the Competition Bureau in 2017 for price-fixing in the commercial bread sector.

Canada Bread pleaded to four counts of price-fixing last year and paid a CAD$50 million (US$35.5 million) fine. While it is the only company to be fined so far, the investigation involves multiple other grocers and food companies.

Maple Foods’ defamation suit

According to reports by the Canadian media, Maple Leaf filed a defamation case against Canada Bread and its parent company, Grupo Bimbo, last month.

The CAD$200 million (US$142 million) lawsuit was filed in response to the bakery giant’s allegations that it had been used as a “shield” to avoid liability in the price-fixing investigation.

Maple Leaf maintained that Canada Bread’s claims were unfounded and lacked evidence.

Food Ingredients First has contacted Grupo Bimbo for a response.