Canada Bread’s Price-Fixing Settlement Highlights Business Ethics ESG Risk Implications for Consumer Product Companies

On June 21, 2023, Canada Bread Company, Limited (not rated by DBRS Morningstar) was fined $50 million for its role in a price-fixing scheme, making it the largest of such fines in Canadian history. This commentary explores how concerns around a consumer product company’s actual or perceived unethical business conduct, one of the environmental, social, and governance risk factors outlined in “DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings” could negatively affect a consumer product company’s credit risk profile, or even its credit rating.

“The guilty plea and ensuing settlement highlight how unethical business conduct could result in costly litigation and fines, erode consumer confidence, and negatively affect a consumer product company’s overall credit risk profile,” noted Aarti Magan, Vice President, Diversified Industries at DBRS Morningstar.