Canada’s Competition Bureau has finalized an agreement with Empire, the parent company of Sobey’s, to restrict or cease the use of property controls, which were deemed anti-competitive. Property controls involve clauses in land titles that can inhibit rival grocery stores from establishing nearby (exclusivity clauses) or restrict the sale of food products at neighboring retailers like pet stores, dollar stores, gyms, and others, as well as limit what future tenants can sell (restrictive covenants).
Empire Company Limited, the owner of various grocery brands including Sobeys, has faced pressure from the Competition Bureau to eliminate property controls following an investigation initiated in 2024. Anthony Durocher from the Competition Bureau mentioned that Loblaw and Sobeys were initially probed for their property control practices, with Loblaw committing to reducing such practices earlier.
The inquiry into property controls by major Canadian grocery chains stemmed from federal hearings in 2023 addressing escalating grocery prices. Economist Jim Stanford noted the significance of the agreement as a victory for consumers and acknowledged the Competition Bureau’s serious approach to addressing anti-competitive practices.
While the deal mandates Empire to cease using certain restrictive covenants, it allows for limited utilization of exclusivity clauses. These exclusivity clauses, though restricted, can still prevent direct competitors from opening nearby stores. Durocher emphasized the need for a case-by-case evaluation, citing specific scenarios where limited exclusivity clauses could be beneficial for competition.
The Competition Bureau’s increased authority to enforce property control regulations has been highlighted as a positive step towards fostering competition and innovation in the grocery market. Durocher expressed the importance of facilitating a more competitive environment to drive down prices and enhance consumer choices.
Moving forward, the Competition Bureau intends to continue addressing property control issues with other grocery chains while simultaneously conducting a detailed examination of barriers to competition within Canada’s food supply chain. Stanford expressed optimism but also emphasized the need for further measures to prevent the undue expansion of large food corporations.