A new voluntary grocery code of conduct designed for grocers, suppliers, wholesalers, and primary producers in Canada is scheduled to be fully implemented on Thursday. The primary objective of the grocery code is to foster fair practices between grocers and suppliers, particularly regarding penalties and fees. This initiative aims to enhance transparency, equity, and predictability within the industry.
Administered by the Office of the Grocery Sector Code of Conduct, the code comprises trade rules, a governance structure, and a process for adjudication and resolving disputes. The five leading grocers in Canada – Empire, Loblaw, Metro, Walmart Canada, and Costco Canada – have officially enrolled in the program.
Effective January 1, the code will be fully operational, including the mechanism for resolving disputes and managing complaints, as well as penalties for violations. Stakeholders such as grocers, suppliers, and other involved parties can now submit formal complaints. Additionally, the Office of the Canada Grocery Code will commence collecting annual membership fees and publishing yearly reports highlighting industry trends, systemic issues, and proposed enhancements.
Despite the code’s aim to improve relationships among industry participants rather than reduce food prices, experts have differing opinions on its potential impact on consumers. The establishment of the industry committee responsible for formulating the code was a response to the contentious fees imposed on suppliers by major grocery retailers, which escalated in 2020.
While the code does not regulate prices or control shelf arrangements, it establishes specific guidelines for grocers and suppliers, including rules on fees and dispute resolution procedures. Although this is a first for Canada, other countries like the U.K. and Australia have similar grocery codes in place.
Former Empire CEO Michael Medline was a key advocate for the code, emphasizing its potential to enhance competition, streamline supply chains, and offer more choices to Canadians. The code is anticipated to encourage innovation and investment in the industry, leading to fewer disruptions in the supply chain.
Gary Sands, the senior vice-president of the Canadian Federation of Independent Grocers, expressed optimism about the code’s potential to positively influence prices. However, opinions vary, with some experts suggesting that it may lead to price increases by restricting grocers’ bargaining power with suppliers.
In conclusion, the grocery code of conduct in Canada is poised to reshape industry dynamics and foster fairer practices between grocers and suppliers, although its direct impact on consumer prices remains a topic of debate among industry observers.