The Competition Bureau of Canada has announced that it is progressing with its investigation into competition within the Canadian grocery store sector. The bureau has secured orders from the Federal Court mandating the parent company of Sobeys to furnish documents and testimony related to its probe into property controls. These controls are legal agreements that can restrict competitors from establishing stores in specific locations, thereby limiting the potential locations for new grocery outlets.
A statement from the bureau highlighted that a lack of competition in the grocery industry could lead to elevated prices, reduced quality, and limited availability of products. Concerns have been raised by industry analysts regarding the potential creation of “food deserts,” where residents are forced to travel long distances to access grocery stores. The bureau has been looking into this issue since 2024, with a particular focus on the Halifax region while also examining the utilization of property controls nationwide.
Empire Company Limited, the parent entity of various grocery chains including Sobeys, Farm Boy, Safeway, IGA, Foodland, and FreshCo, is subject to the recent court orders obtained by the Competition Bureau. These orders aim to provide insights into how Empire negotiates property controls and their possible repercussions. Investigations by CBC’s Marketplace and CBC Nova Scotia have revealed numerous instances of property control agreements across Canada, granting considerable authority to the grocer in enforcing these controls.
Experts in the grocery and food industry have expressed uncertainty about the potential impact of the Competition Bureau’s actions on consumer prices. Stuart Smyth, a professor at the University of Saskatchewan, highlighted the complexities of store locations within mall structures and the challenges associated with altering existing contractual arrangements. Smyth emphasized that immediate policy measures to curb rising food prices are unlikely, attributing fluctuations in food costs to factors such as currency exchange rates and import dependencies.
Although the Competition Bureau has initiated these inquiries, it remains to be seen how effectively they will address consumer concerns over grocery prices. Smyth noted that short-term relief may not be feasible and underscored the importance of long-term strategies to tackle escalating food costs. Requests for comments from Sobeys regarding the bureau’s actions were unanswered by the deadline. Empire has been given a 90-day deadline to comply with the production of records and written returns as per the court orders.
