Loblaw puts restrictions on gift card offer after bread price-fixing scandal

VANCOUVER -- Consumers who receive a $25 Loblaw Companies Ltd. gift card intended as a goodwill gesture in light of the company's participation in a bread price-fixing scheme may end up with less money from any future court judgement or settlement.

Loblaw opened registration for the gift cards Monday and revealed a number of restrictions for redemption and eventual use.

Recipients are not prohibited from participating in any class-action lawsuits, according to the registration site, but they will receive $25 less of any possible damages awarded in the future from any class-action judgments or settlements.

Registrants must agree to a release that says they discharge Loblaw (TSX:L), its parent company George Weston Ltd. (TSX:WN) and others from any kind of relief in connection with their involvement in an alleged bread price-fixing arrangement from Jan. 1, 2002 to March 1, 2015 to the extent of $25.

The release reads that individuals may want to obtain independent legal advice before accepting and agreeing to this.

"They're trying to limit the ultimate amount that they're going to have to pay by turning it into this coupon program and also try and turn it around into a opportunity to bring people into their stores," said Louis Sokolov, a partner at Sotos LLP. The firm has launched one of several class-action lawsuits against Loblaw and other companies in connection with the bread price-fixing arrangement.

"The question of whether or not they can do it is open," he said.

When the class action is completed, the court will determine how much money Loblaw must pay people, said Sokolov. It will look at Loblaw's gift-card program and determine whether to give them any credit for it, he said.

He said hundreds of people have contacted the firm since Monday morning asking for guidance. Sokolov said the firm is telling consumers that registering for the card may limit how much compensation they're entitled to in the future, and to decide based on that whether they want to register for the card.

Loblaw added several other restrictions on the gift card offer Monday.

The company also said it reserves the right to limit the number of cards it distributes. The company previously estimated three million to six million consumers would sign up and receive the card, costing Loblaw $75 million to $150 million.

Customers won't be able to use the $25 card to purchase certain products, including alcohol or tobacco, according to the website.