The dream of a competitive Canadian grocery sector is still alive.
Driving the news: Empire — the grocery chain that owns Sobeys, Farm Boy, and several other supermarkets — will end property controls in its leases, making it the first major Canadian grocer to reach a legally binding deal with Canada’s Competition Bureau to do so.
"Sobeys, in a way, has been the hardest nut to crack," economist Jim Stanford told CBC News. "They denied that these things were wrong and initially pledged to continue doing it."
Previously, Loblaw and Walmart Canada agreed to end property control practices; however, these were voluntary commitments.
Why it matters: The Bureau has designated so-called property controls an impediment to competition, unfairly hobbling rival outlets and potentially dissuading expansion from foreign grocers. They can include “restrictive covenants” that prevent other grocery stores from opening nearby and “exclusivity clauses” prohibiting landlords from leasing to competitors.
These leases can also affect other businesses renting from the same landlord — for example, a dollar store might not be able to carry the same products due to a clause.
Yes, but: Eliminating these restrictions won’t magically increase competition — for now it probably just means that Loblaw can open a store across from a Sobeys if it wants to — it is just one piece of a larger puzzle to increase consumer choice.—QH
