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October 25, 2022

Canada watchdog to study grocery retail competition

The Competition Bureau Canada said the move comes as inflation eats into consumers’ purchasing power.

By Dean Best

Canada’s competition watchdog is to look into the country’s grocery retail sector.

The Competition Bureau Canada said the move comes as inflation eats into consumers’ purchasing power.

“Grocery prices are increasing quickly, so we are going to study how governments can take action to improve competition in the sector,” the anti-trust body said. “More competition means lower prices, more choices, and better convenience for consumers.”

Last week, government figures showed inflation in Canada – as measured by its consumer price index – stood at 6.9% in September. However, food bought at stores rose 11.4%, the fastest increase since August 1981.

The study will consider “three main questions”, the watchdog said. It plans to answer the extent to which higher grocery prices are a consequence of “changing competitive dynamics”. The Competition Bureau Canada will look into whether there are lessons from other countries’ moves to “increase competition” in the grocery retail sector. Thirdly, the watchdog will examine how government can lower barriers to entry and expansion to “stimulate competition for consumers”.

Sylvain Charlebois, a professor of food policy and distribution at Dalhousie University, suggested the study “is about the Bureau itself, first and foremost.” Five years ago, the watchdog announced it would examine allegations of price-fixing among Canada’s bread manufacturers.

He told Just Food: “Changes in the industry will come later, as the Bureau adopts a more ‘authoritative’ approach. Since 2017, the ‘bread cartel’ story was an ethical issue, until inflation became a problem. Since the investigation started, we have not heard from the Bureau once. Now, it is very much a moral issue for most Canadians.

“Regulators and food industry pundits were not ready for this, which is why both lawmakers and regulators are reacting now. I think Canadians need to see a change of tone and style from the Bureau, after the study is completed. That’s what we need, in order to protect independent grocers and food processors alike.”

Interested parties have until 16 December to make submissions to the Competition Bureau Canada. The watchdog said its review will be completed by June.

“This study is not a law enforcement investigation. We are not examining any specific allegations of wrongdoing. However, if we do find evidence during this study that someone may be doing something against the law, then we will investigate and take appropriate action,” the organisation said.

“We will focus on competition in the grocery sector and why prices are so high right now. Some people say it is because inflation has made it more expensive for grocers to buy the products that they sell. Others say that grocers are charging higher prices because they do not face enough competition. We want to better understand these issues. We also want to know what Canada can do to make it easier for new businesses to compete and innovate.”

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