“Something’s Up” – The Calm before the Competition Bureau’s Storm? [Op-Ed]

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As much as the parliamentary investigation into food inflation is more about political artifice, the Competition Bureau’s study on the food industry, announced last fall is the more interesting exercise. Since last year, the Bureau has been heavily criticized for not upholding a decent level of competition in the food industry and help consumers cope with higher food prices. The food retail industry is essentially controlled by a handful of players. Loblaw, Empire/Sobeys, Metro, Walmart and Costco sell well over 85% of all the food we buy in Canada, and the Competition Bureau did nothing to prevent that from happening. But many rumours in the food industry suggest that things are about to change.

Numerous key transactions over the years have been approved. Loblaw acquiring Provigo in 1998, Metro and A&P in 2005, Empire/Sobeys and Safeway in 2013. With higher food prices in recent months, what came to light for many Canadians is how uncompetitive the food retailing landscape is. But it also reminded Canadians of how the food industry sometimes get away with murder, well, almost.

The bread price fixing scheme which allegedly was going on between 2001 and 2015 in Canada came back in the news in recent months, getting Canadians to wonder what the Competition Bureau has been up to over that last 8 years. The investigation is still ongoing, after 8 long years. Since Loblaw declared itself as the proverbial “whistle-blower” back in December 2017, and giving all Canadians a $25 gift card to spend in their stores, we have heard nothing about the investigation. Niet. No accusations, no fines and nobody has gone to prison. All we know is that by disclosing the identities of its purported conspirators and collaborating with the Competition Bureau’s inquiry, Loblaw, and Weston Bakeries, owned by Loblaw at the time and sold since, obtained protection from legal action. In essence, ills at the grocery store prompted Canadians to feel unprotected and vulnerable.

But rumours are swirling now, suggesting that the Competition Bureau may be on the verge of making significant inroads and could make a move. Nothing confirmed of course, but things have been weird. The Bureau has promised to make their study on the food industry public by the end of this month. This is going to be interesting. Many industry pundits are quite uneasy of what could come out of the study. As such, many have started to either play nice or stay quiet.

Photo: Loblaw Companies

We know now that Galen Weston who was himself at the center of the bread price fixing scandal announced he will leave his post as President in less than a year. Since we announced his replacement, he completely disappeared from airwaves and TV commercials for the company. His voice can be heard in the background of some commercials, but that’s the extent of it.

Michael McCain is another industry leader who has completely disappeared. The President and CEO of Maple Leaf Foods who also announced he was leaving his position next year, was also involved in the bread price fixing scandal as former owner of Canada Bread, which was sold in 2014, a year before the bread investigation started. Interesting coincidence.

Court documents reported back in 2021 unveiled those emails between high-ranking industry executives, including some at Maple Leaf Foods, suggest an intention to synchronize meat prices, resembling the alleged coordination of bread prices. That’s right, meat. Because of the pandemic, this story barely made headlines, but the food industry is fully aware that the Bureau has evidence that something was up.

Eric Laflèche, the President and CEO of Métro, gave a rare interview in Montreal recently and openly endorsed the code of conduct for the first time. It surprised many. The code of conduct promises to bring more discipline and competition to the marketplace, and Metro has never been warm to the idea, that is until now. Many leaders like Laflèche are now recognising that things can improve, and some solutions ought to be considered. Again, an unexpected predicament from another leader.

One can only guess that the next few months will be interesting. With a government desperate to show Canadians how they are helping families with inflation, a more relevant Bureau may be what Ottawa needs right now. And that is why the industry is very nervous these days.

Sylvain Charlebois
Sylvain Charlebois
Dr. Sylvain Charlebois is Senior Director of the Agri-Foods Analytics Lab at Dalhousie University in Halifax. Also at Dalhousie, he is Professor in food distribution and policy in the Faculty of Agriculture. His current research interest lies in the broad area of food distribution, security and safety, and has published four books and many peer-reviewed journal articles in several publications. His research has been featured in a number of newspapers, including The Economist, the New York Times, the Boston Globe, the Wall Street Journal, Foreign Affairs, the Globe & Mail, the National Post and the Toronto Star.

8 COMMENTS

  1. Digital price tags should indicate how “sneaky” these trailers have become. Some retailers are changing prices *on the fly* during busier times. Most notably retailers are using the multi-buy scheme to trick consumers into buying more. As someone who has worked in retail for over 30 years, I have seen alot. Most companies are hiding their profits through warehouses and distribution centers. The store cost isn’t actually what the company bought it for from the suppliers.

    • 100% this.
      The profit a store makes is the price they pay to their own warehouses….. Add in backhaul charges, lumping fees, most of the profit comes from managing profitable backend supply chain operations.

  2. This price gouging is still happening go to carmancoop food store manitoba ,they are the only food store around that area prices are insane and alot of expired food still being sold

  3. You failed to mention that this “code of conduct” is being designed by the same industry leaders lol. Same old conflict of interest/appearance of change while gaining more control. I don’t expect it will be much of a positive change, just have the appearance of one.

  4. I shop at stores owned by Sobey’s and Metro for convenience – there’s a Metro a few minutes walk from where I live and stores owned by Sobey’s near or connected to rapid transit lines I use to get home. I buy non-perishables in bulk when they’re on sale, freezing bread, butter and cheese, and check the flyers when they come out. I’m vegetarian so eggs, dairy and pasta are my basics.’I’ve just always shopped that way.

    Recently though I’ve changed some of my grocery shopping habits. I no longer buy anything overly processed. My centre aisle shopping is reserved for basics like flour, oatmeal and jam. I still but organic free range eggs but no longer buy in-store bakery products. Why should I when I can get a fresher, better tasting baguette with no preservatives from the bakery around the corner for between 25 and 50 cents less per loaf?

    I don’t buy snacks or beverages other than tea and coffee. I shop for high quality fresh, locally grown produce, sometimes but not always organic. Like everyone else I’ve noticed prices going up but I’m eating well and getting more value for my money.

  5. I think isn’t a coincidence that Mr Weston decided to depart. He is still gaining a lot fro. His company. In the meantime the workers are suffering , less people scheduled for a shift and who’s in has to work triple of the normal. Restrictions on time to say hello to customers, breaks,( because time it’s money for the company) these rules applying mostly to the older full-time employees because nowadays a new pastime colleagues gets away with everything. Unfareness spreader to all or mostly Loblaws markets….Modify duties not recognized and a deep silence from the Union. So what these people are doing isn’t just gouching on food prices but also reinstading a legalize slavery way to run the businnes. Unfortunatelly, and very convenient that the labour’s board, because being unionized, they are washing their hands off.

  6. Something is happening for sure. How could a vegetable item, parsnip, sold in major grocery stores, priced from double to almost triple. Someone is price gouging for sure!
    I emailed Loblaws about this and received an response totally not relevant to my question – I emailed a 2nd time and this time, no response.
    Price for 1 lb. of parsnip was most expensive at Montreal Provigo $6.99, IGA 4.99 , Maxi 3.99 and Marche P.A. 2.99 (small chain with a few stores).
    Surely, Provigo’s buying power is greater than Marche P.A., so why is their price more than double? And there’s more grocery items like this. I feel we’re getting overcharged and there’s nothing we can do.

  7. And what about shrinkflation, those bags of chips pictured above had a ‘Covid related’ price increase but the size also changed from 250g to 235g per bag, the Coop house brand went from 200g to 180g. Chips I can avoid but everything is getting smaller with the price is staying the same or rising. The staples of our food supply cannot go through these profit centric adjustments. Record profits from grocery retailers is not a positive Canadian economic headline it hurts every Canadian except the elite few.

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