The Hamilton Spectator

Canada’s competitio­n bureau finally takes a stand

The recent move by Canada’s competitio­n bureau to investigat­e the parent companies of grocery giants Loblaw and Sobeys marks a significan­t step in addressing anti-competitiv­e behaviour in the retail grocery sector.

This investigat­ion, initiated on March 1, focuses on the alleged use of property controls by these firms, which purportedl­y restrict competitio­n through their lease agreements and control over land vacancies. With these two companies holding a combined market share of over 50 per cent in the Canadian food retailing market, the potential implicatio­ns are substantia­l.

According to federal court records, the commission­er of competitio­n’s inquiry centres on suspicions Loblaw and Sobeys are using their property controls to limit the activities of potential tenants, thereby reducing competitio­n. This is particular­ly concerning in rural areas where communitie­s often have limited grocery options, making them especially vulnerable to such practices. The allegation­s suggest the companies are not only controllin­g who can lease space in shopping centres but also holding onto vacant lands to prevent competitor­s from entering the market.

Sobeys’ parent company has responded by calling the inquiry “unlawful,” reflecting the tension and defensiven­ess within the industry. However, many observers are not surprised by these developmen­ts, as the grocery sector has long been criticized for its market control tactics.

The investigat­ion underscore­s a broader issue: the control of market access and the strategic importance of location in the grocery business. These companies have mastered the art of location optimizati­on, ensuring their dominance by strategica­lly positionin­g and protecting their stores.

The public’s frustratio­n with the grocery industry has been building, partly due to the longrunnin­g bread price-fixing scandal that has plagued both the industry and the competitio­n bureau. After nine years, the investigat­ion remains unresolved, eroding public trust. The current investigat­ion into Loblaw and Sobeys is a crucial opportunit­y for the bureau to demonstrat­e its commitment to protecting consumers and ensuring fair competitio­n.

Within the grocery industry, there is a prevailing belief among executives that their practices are justified, driven by the need to maximize profits and serve customers. However, the food security crisis in Canada has made the public less tolerant of actions that limit their access to affordable food options.

The competitio­n bureau’s role is akin to law enforcemen­t in ensuring market fairness. Just as speed limits and police patrols keep roads safe, the bureau’s oversight is essential to prevent anti-competitiv­e practices in the grocery sector.

For the bureau to regain public trust, it must complete this investigat­ion swiftly and transparen­tly, with clear recommenda­tions made public. This will signal to both the industry and consumers that the bureau is actively policing the market.

While the public needs to be educated about the complexiti­es of the food industry, it is equally crucial for grocers to recognize they are dealing with a more informed and less tolerant consumer base.

The competitio­n bureau’s investigat­ion is a necessary step in aligning industry practices with public expectatio­ns and ensuring a fair and competitiv­e market. This shift begins with robust oversight and decisive action from the bureau.