Unveiling the Hidden Power of Grocery Giants: A Tale of Control and Competition
Imagine a world where your access to fresh food is dictated by a few powerful corporations. It's a controversial reality that CBC's Marketplace investigation has brought to light. In Canada, the biggest grocery giants, including Loblaws, Sobeys, and Metro, are employing a clever legal strategy to maintain their dominance.
These giants use property law to control who can sell food in your neighborhood, and it's a practice that has sparked criticism and controversy. Property controls, or restrictive covenants, are deals made between landowners and retailers, and they restrict the types of businesses that can operate on a property and what their competitors can sell.
But here's where it gets controversial: these controls are not limited to small, independent shops. Economist and industry critic Jim Stanford points out that these grocery giants are not subject to the same competitive constraints as other industries.
Marketplace's investigation uncovered legal documents for numerous properties across Canada, revealing a range of property controls. Some contracts state that the giants cannot "unreasonably" withhold permission for competitors, while others grant them absolute discretion. For instance, a Sobeys in Winnipeg can withhold permission "unreasonably and arbitrarily" for anyone to sell food on adjacent land.
And this is the part most people miss: property controls extend beyond just grocery stores. A Metro property control in Waterloo restricts what food products a Shoppers Drug Mart can sell and even limits the capacity of nearby restaurants.
While Metro and Sobeys deny that these controls hinder competition, Loblaws acknowledged their impact but refuses to eliminate them unless other retailers follow suit. Stanford explains it as a mutual back-scratching arrangement, where consumers ultimately pay the price.
Property controls become even more restrictive when developers own larger tracts of land. Marketplace found controls with a radius of up to five kilometers, prohibiting the sale of fresh food on that land. This affects shoppers like Teresa Petrie in Picton, who has noticed a steep increase in grocery prices and is concerned about the lack of competition.
The restrictive covenants don't just control who sells food; they dictate what food can be sold. For example, a Foodland in Picton's contract bans the neighboring dollar store from selling fresh or frozen food, including meats, fruits, and dairy products. It's a clear attempt to limit competition and maintain market power.
Grocery prices have been rising faster than inflation since the pandemic, leading to questions about Canada's competition problem. With Loblaw, Empire, and Metro owning nearly 60% of the Canadian market share, it's no wonder economist Jim Stanford sees property controls as another way for grocery giants to exploit their shoppers.
The federal government held hearings in 2023 to address rising grocery prices, but the CEOs' responses were contradictory. While they assured Parliament of their efforts to contain price increases, their messages to shareholders boasted about solid results and strengthening earnings power.
The Competition Bureau is now investigating grocery stores' use of property controls, obtaining court orders to advance its investigations into Sobeys and Loblaws. It has negotiated the removal or modification of property controls in Crowsnest Pass and Halifax. Acting senior deputy commissioner Anthony Durocher emphasizes that these controls deny consumers the benefits of competition, including lower prices and greater choice.
Manitoba has taken a bold step by introducing the Property Controls for Grocery Stores and Supermarkets Act, requiring grocery companies to register their controls or face invalidation. Premier Wab Kinew believes that one grocery store should not prevent another from opening, and the government will review the registered controls individually.
Shoppers like Teresa Petrie want the government to intervene and stop grocery giants from using property controls. They argue that essential goods should not be subject to such control, and there should be laws to protect consumers.
The federal government has promised to monitor the situation and ensure competition in the grocery industry, while the Competition Bureau continues its investigations. With expanded powers, the bureau is prioritizing the enforcement of the Competition Act to address these concerns.
So, what do you think? Should property controls be eliminated to promote competition and lower prices? Or are they a necessary strategy for retailers to protect their investments? Let's discuss in the comments!
