Canada’s grocery competition hampered by lease restrictions: experts

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Property controls over who can operate nearby a major barrier to new stores

As Canadian consumers have increasingly soured on the major grocers, the country’s competition watchdog has turned its sights on restrictive clauses in retail leases that it says are hampering competition in the grocery sector.

Meanwhile, the Competition Bureau is looking into the use of property controls in the grocery industry. “It’s not going to necessarily bring a big international competitor in,” said Michael von Massow, a food economy professor at the University of Guelph. “Some landlords would say that having a large retailer as a draw is worth restricting some of the other avenues they can pursue,” he said.

The REITs have a wide reach geographically, and so property controls often extend past one mall or one plaza, said von Massow. Sobeys owner Empire said in a separate court application that the bureau’s investigation gives the Competition Commissioner “the appearance of a lack of independence” amid political pressure and criticism over grocers’ prices, and called the inquiry “unlawful.” The Competition Bureau has confirmed that it has filed a motion to strike Empire’s application for judicial review.

 

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