Canada’s Competition Bureau has come to an agreement with Empire, the parent company of Sobey’s, to restrict or discontinue the use of property controls due to anti-competitive practices. These controls, embedded in land titles, can prevent rival grocery stores from establishing nearby (exclusivity clauses) or prohibit the sale of food items at neighboring retailers such as pet stores, dollar stores, and gyms (restrictive covenants).
Under scrutiny for months, Empire Company Limited, which encompasses Sobeys, Farm Boy, Safeway, Freshco, and others, was urged by the consumer watchdog to eliminate property controls. This initiative stemmed from a 2024 investigation into the impact of property controls used by Loblaw and Sobeys in the grocery sector.
Economist Jim Stanford highlighted the significance of this agreement, emphasizing its positive outcome for consumers. The deal signifies a shift in the recognition of these practices as economically and morally incorrect, with the Competition Bureau taking a firm stance against them.
While Empire must now refrain from implementing new or existing restrictive covenants, limited use of exclusivity clauses is permitted under the new agreement. This provision allows the company to prevent direct competitors from opening within a shared development, albeit under specific circumstances deemed justifiable by the Competition Bureau’s guidelines.
The Competition Bureau, armed with increased authority granted earlier this year, aims to foster competition and innovation in the grocery sector. The bureau’s ongoing investigations into the industry’s barriers to competition, including production, distribution, and pricing within Canada’s food supply chain, will pave the way for a more competitive market landscape.
Moving forward, the Competition Bureau will continue addressing property control issues, extending its examination to other grocery chains while also pursuing formal inquiries into industry practices. The ultimate goal is to curtail the dominance of large corporations and promote a fairer environment for businesses and consumers alike.