The Competition Bureau of Canada has launched investigations into the parent companies of grocery chains Loblaws and Sobeys for alleged anticompetitive conduct. The court documents reveal that the commissioner believes that the firms’ use of property controls is limiting retail grocery competition. The bureau had previously announced its investigation into property controls in the grocery sector, which can act as barriers for independent stores, chains looking to expand, and foreign players entering the market. The bureau had recommended limiting the use of property controls in the grocery sector to boost competition and facilitate the opening of new supermarkets. Industry Minister François-Philippe Champagne has expressed the desire to bring in a foreign grocer to strengthen competition in the Canadian market.
Loblaw Cos. Ltd. and Sobeys parent Empire Co. Ltd. are two of the major grocery companies in Canada. The investigations focus on their operations in Halifax but also span across the country, examining property controls in contracts and lease agreements used by the retailers. These controls can restrict how a piece of land can be used and limit who a landowner can lease to, impacting competition in the retail sale of food products. The Competition Bureau is looking into “exclusivity clauses” in commercial lease agreements that restrict what products can be sold in close proximity to another business. The probes are investigating the companies’ use of these controls, which may give them the ability to exclude competitors and dictate business terms within certain geographic areas.
The commissioner has applied to the Federal Court to order the companies to hand over records about real estate holdings, lease agreements, customer data, and other relevant information. The court documents describe Empire and George Weston’s ownership interests in real estate investment trusts, where their grocery banners are significant tenants. The commissioner alleges that Empire and George Weston use property controls in a manner that limits competition in the grocery sector, affecting where and how businesses can operate in the retail sale of food products. The investigations are focused on the companies’ use of restrictive covenants and exclusivity clauses in lease agreements, which may impact how competitors can enter the market and conduct business.
Legal experts note that this case is novel, as previous allegations of abuse of dominance involved companies with more market power than George Weston or Empire. The Competition Bureau must argue that the companies are jointly dominant and using similar tools to exert control over the market. Sobeys’ parent company, Empire, denies having a dominant market position and argues that property controls are not unique to the grocery sector but have been widely used across various retail sectors for decades. Empire has claimed that the inquiry was launched for an improper purpose, amidst criticism over rising grocery prices. The company asserts that the Competition Commissioner must make decisions independently and without political interference.
The Competition Bureau has launched formal investigations into Loblaw and Sobeys’ parent companies in response to allegations of anticompetitive conduct related to the use of property controls in contracts and lease agreements. These investigations are part of an effort to boost competition in the grocery sector and facilitate the entry of new players into the market. The bureau’s probes are zeroing in on the companies’ operations in Halifax and across Canada, focusing on how property controls impact retail grocery competition. Both companies have faced accusations of using property controls that may limit the ability of competitors to enter the market and conduct business, prompting an inquiry into potential anticompetitive behavior.
As the investigations progress, legal experts are closely monitoring the case, which represents a new challenge for the Competition Bureau as it seeks to address allegations of anticompetitive conduct in the grocery sector. The companies under investigation have defended their use of property controls, arguing that they are common in various industries and not unique to the grocery sector. The outcome of these investigations may have significant implications for the Canadian grocery market, as regulators aim to create a more level playing field for suppliers, smaller retailers, and new entrants. The Competition Bureau’s use of new tools and amendments to the Competition Act underscores its commitment to ensuring fair competition and preventing anticompetitive practices in the retail grocery industry.
