In a letter to the Lobaw CEO, the head of Sobeys takes aim at his rival for what he suggests is a deliberate attempt to damage his company's reputation and threatens legal action

Earlier this week, Loblaw Cos Ltd. and its parent company George Weston Ltd. admitted to participating in a 14-year price-fixing conspiracy that inflated the cost of bread on the shelves of nearly every major grocery chain in Canada. On Friday the Globe and Mail obtained a copy of a letter sent to Loblaw CEO Galen Weston Jr. by Sobeys CEO Michael Medline in which he threatened to take legal action against its larger rival. Sobeys said it was “outraged” by Weston’s “reckless” assertion about industry-wide price fixing.

Here’s what Medline wrote to Weston:

Dear Galen,

I felt the need to send you a note following your comments of December 19. The Sobeys team, including our executives and Board of Directors, were shocked and outraged by the reckless nature of your assertions in your press release and during your investor/press conference surrounding your admission of wrongdoing (for over a decade) concerning commercial bread pricing.

As you and I both know, the allegation of price-fixing is a terrible charge and one that goes right to the trust that must exist between a retailer and its customers. That is why we were so disappointed that while you were addressing your own actions and immunity deal, you took the opportunity to throw so many other retailers under the bus with you.

To state that there was an “industry-wide price fixing arrangement” was unfair, unsubstantiated, and quite possibly defamatory. You presented it as a statement of fact, when you knew or should have known that your accusation could mislead the Canadian public; you more than implied that the “court filings” contain more substance than they actually do.

We at Sobeys do not believe that we contravened the Competition Act, and reviewing the court filings this week does not change our view. We take the statute and its meaning very seriously. We have not been charged under the Act and we certainly have not been found guilty of any crime. It may be a cliché that a party is innocent until proven guilty, but you seem to have missed that point in this case.

Your written and spoken words of December 19 can only be construed as a deliberate attempt to damage the reputations of Sobeys and, perhaps, other retailers. We formally ask you to publicly and immediately retract your assertion that Sobeys conducted itself in the same manner as Loblaw and Weston and your allegation that, at this time, there is proof of participation by Sobeys in a price-fixing arrangement.

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

This whole affair is disappointing. The Canadian consumer deserved better than this.

Regards,

Michael Medline

President & CEO