The director of Mr Bagel, New York Bagel’s main competitor, made the allegations to the press and the UK’s Office of Fair Trading that New York Bagel’s director had tried to coerce him into raising prices.
On Saturday, UK newspaper The Daily Mirror published a video on its website which it claims shows the bagel rivals discussing the price fixing over a meal. It was allegedly filmed undercover by Mr Bagel’s director after he became suspicious of his competitor’s motives, the Mirror claims.
Canada Bread said in a statement that it had entered into discussions to acquire Mr Bagel in October, and that the main terms had already been agreed. It claims that negotiations stalled early this month when, it says, "Mr Bagel sought to significantly raise the selling price of the business late in the process."
President and CEO of Canada Bread Richard Lan said: "We have been operating under the premise that we were in the late stages of acquiring this business. While these allegations are unproven they are serious, and we are taking all precautionary steps to fully investigate this matter and determine the facts."
New York Bagel has suspended its managing director while the allegations are being investigated.
Canada Bread said that it had received detailed confidential information from Mr Bagel, which was "consistent with normal acquisitions process". It added that it was "involved in intensive due diligence which appears to have extended to the discussion of pricing strategies to be implemented after the acquisition."
Canada Bread is 90 per cent owned by Maple Leaf Foods, which owns the UK’s New York Bagel Company.
According to Euromonitor figures, the packaged and industrial bread market, which includes bagels, has grown by 16.6 per cent over the past five years, from £1.5m to £1.8m (approximately €1.71m to €2.06m at today’s rates).
No one from Canada Bread was available for further comment prior to publication.