Amidst growing concern over high grocery prices in Canada, retail expert Doug Stephens suggests a path toward fostering more competition in the industry. With just three major retailers—Loblaw Companies Limited, Metro Inc., and Sobeys Inc.—controlling 70% of the market, Stephens emphasizes the necessity of exploring all avenues to increase competition and offer consumers more choices.
One proposed solution is to develop a structure that encourages domestic competition, particularly supporting small to medium-sized retailers and specialty grocers. This approach aims to provide a framework for nurturing homegrown competition within the Canadian market.
The ongoing dispute between the Canadian government and major grocers has led to a “ping pong match” scenario, according to Stephens. However, consumer actions, such as the monthlong boycott of Loblaw, are beginning to influence the conversation. Stephens believes that consumer pressure is prompting companies like Loblaw to engage in discussions about potential solutions to address the issue.
The Competition Bureau’s investigation into alleged anticompetitive conduct by the owners of Loblaws and Sobeys revolves around the use of restrictive covenants, which restrict other businesses from operating in proximity to the major retailers. While Sobeys’ owner has criticized the investigation as “unlawful,” Loblaws’ parent company, George Weston Ltd., is cooperating with the bureau’s review.
Restrictive covenants, commonly used in various industries including retail, have drawn scrutiny from the Competition Bureau due to their potential to stifle competition. Despite pushback from some quarters, the bureau maintains that such practices can have a dampening effect on competition within the grocery market.
As the investigation unfolds, stakeholders and consumers alike are paying close attention to the potential outcomes and implications for the future of competition in Canada’s grocery sector.
