Email Us:
November 2, 2022
Grocery shopping
Photo by Nodar Chernishev /Getty Images

Canada’s Competition Bureau has decided to investigate the Canadian food industry, and more specifically, our grocery sector.

For years, many were calling for this, recognizing the bureau has little authority or power over anything. It waited until food inflation became a political hot potato to investigate the matter.

Windsor Star Headline News

Sign up to receive daily headline news from the Windsor Star, a division of Postmedia Network Inc.

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

Better late than never. Even its new director admitted to the problem of powerlessness. For instance, the bureau can’t force any company to submit any body of evidence for the upcoming study. Quite sad really.

Make no mistake though, this study is all about the bureau, nothing more. It needs a different approach, a new perspective on things.

It clearly requires more knowledge about the food industry overall. When evaluating mergers and acquisitions, the food industry deserves a longitudinal analysis to better appreciate how consolidation can impact sectors over time, like we’ve seen in groceries and processing.

Oligopolies can work if independents and smaller players remain somewhat sheltered from overbearing market forces. Miscalculated compromises can only lead to regulators overlooking our market’s most fundamental element, the consumer.

Consumers in many cities now have only one grocer and fewer choices are offered in stores due to the continuing pressure imposed on food processors, especially smaller operators.

Many have given up.

Unlike other industries, food manufacturers must pay grocers to do business with them. Listing fees, marketing costs and the list goes on. Such a foreign concept for people who may not understand the economics of food distribution.

Canadians should not expect any major changes to the industry anytime soon coming from the study. For years, the bureau has rubber-stamped many deals and has investigated accusations of collusion on countless occasions with limited success.

Chocolate, salmon, and of course, bread are some examples. That needs to change.

In 2017, when Canadians found out about Loblaws’ bread scheme, consumers were insulted. It was very much seen as an ethical blunder by our country’s number one grocer. With $25 gift cards, everything seemed forgotten and forgiven.

Not quite. With higher food prices, the bread price fixing scandal rapidly became, in a matter of months, a moral issue for Canadians. The investigation actually started in 2015 when Loblaws admitted its wrongdoing.

For 14 years, from 2001 to 2015, it admitted to fixing bread prices in Canada, along with Weston Bakeries, owned by Weston Companies at the time. The scheme allegedly included five more companies; all denied their involvement.

After seven years, we still haven’t seen anyone being accused or receiving any fines. Competition laws prohibit any collusion and companies can receive fines of up to $25 million and 14 years in prison. But without a watchdog watching, the bureau has a lot of unfinished business.

Canadians are voicing their frustration and have somewhat singled out grocers as the inflation boogeymen, mainly Loblaws. The evidence to accuse any grocer of profiteering is weak at best, but it doesn’t matter.

Even reporters from other countries couldn’t believe the backlash Loblaws received when it opted to freeze prices last week for its No Name products.

Loblaws is arguably the most hated grocer in the world.

This is no accident. Canadians do have an awkward relationship with grocers for one simple reason. Many Canadians feel unprotected and left hanging high and dry. Knowing that the bureau remains idle on many fronts, Canadians are taking matters into their own hands — and who can blame them?

In the United States, it can take just a few months to see lawmakers accusing food companies and getting them to write cheques to consumers a few months later. This happened in the case of JBS, the meat packer.

The beef giant paid US$52.5 million to settle a price-fixing lawsuit. Also in the U.S., lawmakers are pushing back on the $24.6-billion Kroger-Albertson deal, arguing it would create a monster of a grocer, with 15 per cent market share.

To get regulatory approval, the new company may be forced to let go of up to 375 stores and create a rival for the new company. This would never happen in Canada under the current regime.

And by the way, both Loblaws and Empire/Sobeys already have more than 15 per cent of the Canadian market. The bureau is sleepwalking through these deals.

The report should be done by June 2023. Hopefully, the bureau will give itself a road map for fundamental changes, to give itself more authority and be able to apply more rigour to any case presented to it.

But before that, the bureau will need to do some soul searching. Canadians deserve it.

Sylvain Charlebois is a professor and senior director of the Agri-Food analytics lab at Dalhousie University.

Read More

See more food service industry news, reviews and products at FSX, the Food Service Exchange, the commercial food service industry’s go-to source for purchasing overstock, discontinued, and scratch-and-dent equipment and supplies, and you will be shocked at how good our prices are (an average discount of over 50% of today’s market price).

The FSX online marketplace provides restaurants, caterers, schools and other food service facilities with access to a wide assortment of products. The exchange allows for direct sales between pre-approved sellers and buyers, ensuring a seamless, reliable, and fast timely transaction process. Whether it is a model from a previous year or an item with a slight imperfection, buyers can purchase anything they need from our extensive pool of pre-selected, certified top equipment manufacturers and dealers. With Food Service Exchange, customers can expect premium equipment and supplies, amazing prices, timely shipping, and consistent satisfaction. Find out more information today about FSX Food Service Commercial Kitchen Equipment and Restaurant Supplies at 20 – 50% off market prices, with a minimum 90-day warranty. Plus, 5-star customer service reviews, unmatched 90-day warranty, and always free shipping!