Canada’s leading grocery chains, such as Loblaws, Sobeys, and Metro, are utilizing property regulations to manage competition from other grocery stores, dollar stores, pharmacies, and gas stations, as per an investigation conducted by CBC’s Marketplace. Property controls are agreements between a landowner and a retailer that limit the types of businesses allowed on the property and the products they can sell, aiming to encourage the retailer to establish their store on the land. Commonly known as restrictive covenants or exclusivity clauses, these controls are widespread in various industries but have drawn criticism within the grocery sector.
Economist Jim Stanford highlighted concerns, stating that these measures benefit large corporations rather than small businesses and are not subject to the same competitive pressures as other industries. Marketplace uncovered numerous property controls in legal documents across Canada, showing varying degrees of restrictions negotiated by the grocery giants, ranging from permitting limited competition to granting extensive discretion.
For instance, a Sobeys property control in Winnipeg prohibits any adjacent businesses from selling food unless approved by Sobeys, with permission being arbitrarily withheld. In another case, a Metro property control in Waterloo restricts the food items a Shoppers Drug Mart can offer and sets a distance requirement for larger restaurants near Metro’s store. While Metro and Sobeys defended the controls as not hindering competition, Loblaws acknowledged their impact but insisted on maintaining them until other major grocery retailers follow suit.
The issue of rising grocery prices and market domination by major players like Loblaw, Empire, and Metro has led to scrutiny by experts and government authorities, including the Competition Bureau. Economist Stanford criticized these property controls as exploitative, emphasizing that they contribute to the market power imbalance held by major grocery chains.
With the Competition Bureau investigating the use of property controls by Sobeys and Loblaw’s parent companies, steps have been taken to modify or remove controls in specific locations. Manitoba introduced legislation requiring grocery companies to register property controls, with Premier Wab Kinew advocating for increased competition and consumer choice by challenging these restrictions. Meanwhile, Loblaws has expressed readiness to eliminate property controls, citing benefits for consumers, while Metro and Empire remained silent on the matter.
Consumers like Teresa Petrie advocate for government intervention to curb the influence of grocery giants through property controls, emphasizing the need for fair competition and consumer protection. Federal Industry Minister Melanie Joly highlighted ongoing monitoring efforts to ensure a competitive grocery market, aligning with the Competition Bureau’s commitment to enforcing regulations and promoting fair practices in the industry.