The Competition Bureau of Canada has announced its progress in investigating competition within the Canadian grocery store sector. The bureau has secured orders from the Federal Court mandating the parent company of Sobeys to provide documents and testimony for its probe into property controls. These controls are legal agreements that can hinder competitors from establishing stores in specific locations, restricting the opening of new grocery outlets.
According to the bureau, a lack of competition in the grocery industry can lead to heightened prices, diminished quality, and reduced availability of products. Concerns have been raised by industry experts regarding the creation of “food deserts,” where residents face challenges accessing grocery stores within reasonable distances. The bureau has been actively looking into this issue since 2024, with a particular focus on the Halifax region, while also examining the use of property controls nationwide.
Empire Company Limited, the parent organization of various grocery chains like Sobeys, Farm Boy, Safeway, IGA, Foodland, and FreshCo, is subject to the court orders obtained by the Competition Bureau. These new orders aim to provide insights into how Empire negotiates property controls and their potential impacts. Investigations by CBC’s Marketplace and CBC Nova Scotia have uncovered multiple instances of property control agreements across Canada.
Some of these agreements grant wide discretion to grocers in enforcing property controls, potentially allowing them to unreasonably prevent competition. While the move by the Competition Bureau is under scrutiny by industry observers, including Stuart Smyth, a professor at the University of Saskatchewan, doubts persist about its immediate impact on consumer prices. Smyth highlights the complex nature of the industry’s structure and negotiations with property management companies, indicating challenges in reversing the trend of rising grocery prices.
Importantly, Smyth emphasizes the influence of factors like currency exchange rates on food prices, as Canada heavily relies on importing fresh produce from the U.S. He remains skeptical about the short-term relief that may result from the government’s food security strategy and anticipates a longer-term approach to address price concerns.
Sobeys was contacted by CBC News for comments on the Competition Bureau’s actions but did not respond by the deadline. Empire has been given a 90-day deadline to furnish records and written responses following the issuance of the court orders.
