Three years after concluding that property controls may be limiting grocery competition in Canada, the Competition Bureau Canada is expanding its investigation into Sobeys and continuing a campaign that has already led to voluntary concessions from major grocers and new legislation in Manitoba.
The Bureau announced this week that it had obtained a Federal Court order requiring Empire Company Limited, the parent company of Sobeys, to provide records and information as part of an expanded investigation into the company’s use of property controls across Canada.
The investigation remains focused on grocery retailing. However, it is being watched by competition lawyers, commercial real estate professionals, landlords, developers and retailers because property controls are commonly used in retail leasing and real estate agreements.
What Property Controls Are
The Bureau uses the term “property controls” to describe restrictions that can limit how real estate is used or leased.
These can include restrictive covenants attached to land and exclusivity clauses contained in commercial leases. In the grocery context, such restrictions may prevent a competing grocery retailer from opening on a property, within a shopping centre, or in a nearby location.
Property controls have long been used in commercial real estate for a range of business reasons. A retailer may seek protection before committing to a new location. A landlord may use exclusivity provisions as part of a broader leasing strategy. A developer may rely on certain restrictions to support investment in a project.
The Competition Bureau has not said that all property controls are inappropriate. In guidance published in 2025, the regulator acknowledged that some restrictions may be justified depending on the circumstances.
The issue, according to the Bureau, is whether a particular restriction is broader, longer-lasting, or more restrictive than necessary.
A Process That Began With a 2023 Grocery Study
The current investigation can be traced back to the Bureau’s 2023 report, Canada Needs More Grocery Competition.
That report examined Canada’s grocery sector and identified several barriers that may make it difficult for new competitors to enter the market. Among the issues highlighted were restrictive covenants and exclusivity clauses that could limit where competing grocers are able to operate.
The report recommended that governments act to limit the use of property controls in the grocery sector.
In June 2024, the Bureau announced investigations into Sobeys and Loblaw related to the use of property controls in the Halifax Regional Municipality. Federal Court orders were obtained to compel the production of records and information.
The issue continued to gain momentum in 2025. Empire agreed to remove a restrictive covenant affecting a property in Crowsnest Pass, Alberta after the Bureau raised concerns about its impact on grocery competition in the community.
Loblaw later announced voluntary commitments that included eliminating existing restrictive covenants, refraining from entering into new restrictive covenants, waiving certain exclusivity clauses, and changing how certain food-related restrictions would be used in new Shoppers Drug Mart leases.
The Bureau also published formal guidance explaining how it intends to assess competitor property controls under the Competition Act.
The latest Sobeys development suggests the Bureau is continuing to pursue one of the central recommendations from its 2023 grocery report.
Why the Industry Is Watching
For decades, property controls have generally been viewed as ordinary commercial tools in parts of the retail real estate industry.
The Bureau’s actions do not mean those provisions are inherently problematic. They do, however, signal increased scrutiny of how they are used within the grocery sector.
That distinction matters because exclusivity clauses are common in commercial leasing. They may be used to secure anchor tenants, support a tenant’s investment in a location, or help landlords manage the mix of businesses within a property. Restrictive covenants can also arise in real estate transactions, particularly where land is sold with ongoing restrictions on future use.
The Bureau’s focus to date has been on grocery retailing, where site availability can be a significant issue in some markets. It remains unclear whether the Bureau’s approach will lead to broader enforcement activity beyond the grocery sector.
However, its published guidance applies to competitor property controls more generally, which is why the issue has attracted attention beyond the supermarket industry.
Manitoba Moves on Grocery Property Controls
The regulatory environment is also beginning to shift outside the Bureau’s investigations.
In 2025, Manitoba introduced legislation aimed at grocery-related property controls. The legislation effectively prohibits certain restrictive covenants and exclusivity clauses that restrict grocery competition in the province.
The Manitoba development is significant because it shows that concerns about property controls are moving beyond Bureau guidance and investigations into legislative action, at least in the grocery sector.
Whether other provinces consider similar measures remains to be seen.
What Comes Next
The expansion of the Sobeys investigation does not constitute a finding of wrongdoing. Empire has maintained that property controls can serve legitimate commercial purposes.
The Bureau, meanwhile, continues to argue that some property controls can make it harder for grocery competitors to enter markets and may limit consumer choice.
The central issue is no longer whether property controls exist. They do, and they have long been part of commercial real estate.
The question now is where regulators will draw the line between legitimate business protections and restrictions that may lessen competition.
Whether the Bureau ultimately secures additional commitments or pursues further enforcement action remains uncertain. What is clear is that a recommendation contained in a 2023 grocery market study has evolved into one of the most significant competition issues currently facing Canada’s grocery industry.
For landlords, developers, retailers and real estate professionals, the grocery sector remains the focus for now. But the Bureau’s approach to property controls is likely to be watched closely wherever long-term leases, exclusivity provisions and land-use restrictions form part of the commercial real estate playbook.
