Sobeys’ parent company, Empire Company Limited, released a statement on Tuesday saying it will not enforce restrictive covenant interests on any properties, including those previously sold and it is not placing or registering restrictive covenants on any properties.
Three years after concluding that property controls may be limiting grocery competition in Canada, the Competition Bureau Canada announced in late June it was 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 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.
“Empire Company Limited’s comprehensive approach to property controls reflects its ongoing commitment to a competitive and accessible grocery market for Canadians,” said the company in its statement.
“Property controls, including restrictive covenants and exclusivity clauses, are widely used across various industries and can support investment, enable market entry and sustain developments, particularly in underserved communities.
“While these arrangements are not inherently anti-competitive, we recognize the increased scrutiny in this area and the importance of ensuring they are used appropriately. We have engaged constructively with various stakeholders, including the Competition Bureau, and that dialogue has helped inform our ongoing practices in this area.”
It outlined the following in its approach.
Exclusivity clauses:
- Not enforcing exclusivity clauses on the properties specifically identified in the June 2026 order obtained by the Competition Bureau.
- Not enforcing exclusivity clauses re-registered in Manitoba following the passage of Bill 31.
- Not enforcing or entering into any radius clauses to allow for increased retail activity surrounding our grocery store sites.
- Not enforcing or entering into exclusivity clauses restricting specialty food retailers (e.g., butchers, bakeries) that sell only a subset of the products typically sold by a grocery store.
Governance and broader actions taken:
- Maintaining a formal, consistent and principles-driven approach to reviewing and responding to property control waiver and removal requests, with affected parties encouraged to contact propertycontrols@sobeys.com. Empire considers all such requests with a view to removing restrictive covenants and limiting the enforcement of exclusivity provisions to only those that are justified.
- Limiting the geography, product scope and duration of exclusivity provisions in all future grocery store leases across Canada.
- Regularly reviewing existing property controls to identify opportunities to remove or modify those where an Empire banner is the only grocery store in a community.
- Encouraging all grocery industry participants to adopt similar principles to support a consistent and balanced approach.
- Continuing to work constructively with the Competition Bureau and all levels of government to advocate for a clear and consistent legislative and regulatory approach to property controls across grocery and all industries.
“Customers remain at the centre of our focus. We are committed to ensuring they continue to benefit from choice, value and access,” it said.
“I think Empire’s announcement on property controls reflects the undue pressure the grocery industry faces from governments. In my opinion property controls were not unreasonable as grocers spend tens of millions of dollars of capital to build stores and need to yield a reasonable return on that investment in that trading area,” said retail analyst Bruce Winder.
“As grocery net margins are already thin at 2-4%, taking away property controls will not be the panacea that governments think it will be to lower prices.
“Much of the inflation we see at the grocery store is a combination of geopolitical issues, structural issues within Canada’s food processing supply chain & input cost issues related to global weather patterns.”
In June, the Competition Bureau said it obtained court orders to advance its investigation into Empire Company Limited’s use of property controls in Canada. Empire is the parent company of Sobeys, Farm Boy, Safeway, IGA, Foodland and FreshCo, among others.
“The Bureau’s investigation is examining the company’s use of property controls across Canada to assess whether their practices harm competition in the retail grocery industry. Lack of competition in the grocery industry can result in higher prices, lower quality and less availability,” it said.
“The court orders, granted by the Federal Court, require the production of records, written information and oral testimony relevant to the Bureau’s investigation.
“Earlier in the investigation, the Bureau obtained an initial court order requiring Empire to produce information focused on property controls in the Halifax Regional Municipality. The new orders will provide the Bureau additional information about the scope of Empire’s practices in Canada, including how the company negotiates property controls and their potential impacts on competition across Canada.”
The Bureau said its investigation is ongoing and there is no conclusion of wrongdoing at this time.
Property controls are restrictions on the use of commercial real estate that limit how a property can be used by others. These property controls are common across Canada, especially in retail settings. They can harm competition by making it difficult, or even impossible, for businesses to open new stores, it said.
In June 2023, the Bureau published its grocery market study, which concluded that property controls can limit competition from new grocers and can deny consumers the benefits of competition including lower prices, greater choice and increased innovation.
In June 2024, the Bureau obtained two court orders to advance its investigations into the use of property controls by Sobeys’ and Loblaw’s parent companies related to property controls in the Halifax Regional Municipality.
In January 2025, the Bureau took investigative actions that resulted in Empire agreeing to remove a property control that restricted retail grocery store competition in Crowsnest Pass, Alberta.
In June 2025, the Bureau announced that it continues to monitor Loblaw’s public commitment to end property controls in Canada.
The Bureau said it urges Canadians to report any property controls that may be anti-competitive using the online complaint form.
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