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.
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.