The Competition Bureau says it has launched an investigation into the use of minimum advertised pricing policies in the grocery sector, adding that it is concerned that these policies are restricting competition, and keeping lower prices out of reach for Canadians.
“Every week, Canadians use grocery flyers, apps and online promotions to find deals. But Canadians would be surprised to learn that stores aren’t always allowed to advertise their lowest prices,” said the Bureau.
“These policies, which can be imposed by suppliers or negotiated between suppliers and retailers, set the lowest price at which a retailer can advertise a product. In industries like retail grocery, where a few large companies dominate the retail landscape, these policies can make it harder for retailers, including discount grocers, to offer lower prices and compete for customers.”
The Bureau said it wants to hear from consumers, retailers, suppliers and others with experience with these policies about how they impact grocery pricing. The input received will support its investigation in the sector, as well as informing its examination of competition across Canada’s food supply chain.
“Canadians expect grocery stores to be able to advertise their best deals. We’re concerned that policies that prevent this make it harder for grocers to compete, and for consumers to access lower prices. At a time when food affordability remains an important concern for Canadians, we want to hear about how these policies are affecting grocery prices and consumer choice,” said Jeanne Pratt, Interim Commissioner of Competition.
The Bureau said minimum advertised pricing policies can prevent retailers from advertising lower prices, even when they are prepared to offer those prices in-store. Some retailers may remove in-store discounts entirely if they cannot advertise lower prices under these policies.
The Bureau said it is examining whether these policies make it harder for Canadians to find deals, reduce price competition, create barriers for discount and new grocers, and make it easier for grocers to coordinate the prices they charge.
The Bureau’s Retail Grocery Market Study found that greater competition in retail grocery would help lower prices and deliver more choice and innovation for Canadians.
“The Competition Bureau is asking the right question. If grocers can sell a product for less but cannot advertise that price, Canadians may never know a better deal exists. But we all know that this story is more complicated than that,” said Sylvain Charlebois, Director/Professor, Agri-Food Analytics Lab, Dalhousie University.
“This investigation matters because Canadians rely on flyers and apps to stretch their grocery budgets. The Bureau needs to find out whether pricing rules are keeping real discounts out of sight.”
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