Canada’s Competition Bureau says it is launching a study on competition in the grocery industry.
The agency said in a news release Monday that it plans to investigate various problems in the grocery industry, “with the aim of recommending measures that governments can take to help improve competition in the sector.”
The bureau functions as perhaps the most prominent consumer watchdog group in Canada by investigating anti-competitive practices that serve to drive up prices for consumers, including things like deceptive marketing, price fixing, and even outright fraud.
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The bureau says the move is not a reaction to any specific allegations of wrongdoing, but comes as consumers grapple with rising food prices at their fastest rate in more than 40 years.
Last week, new data showed that while Canada’s inflation rate slowed to 6.9%, food prices bought in stores increased by more than 11%. The price of food has been rising at a faster rate than the general inflation rate for 10 months in a row.
Many factors have been blamed for rapidly escalating food prices, including extreme weather events, higher input costs, and temporary supply chain stresses such as the ongoing invasion of Ukraine. But the office says it wants to try to understand whether there are anti-competitive factors at play, so it’s looking for answers to three broad questions:
- To what extent are higher grocery prices the result of changing competitive dynamics?
- What can we learn from the steps that other countries have taken to increase competition in the sector?
- How can governments lower barriers to entry and expansion to stimulate competition for consumers?
The bureau says the relationship between supermarket chains and their suppliers will not be included in the study, something Professor Mike von Massow of the University of Guelph says is a missed opportunity.
“The Competition Bureau is there to look at competitive behavior and, to me, that’s where there are a lot more indications and clear evidence that there has been some anti-competitive behavior,” he told CBC News in an interview.
“I think they are missing the point by not looking at the relationship with suppliers.”
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The office is seeking input from the public on the matter. Anyone who wishes to contribute is invited to contact the office through its website before December 16.
When its investigation is complete, the bureau says it plans to publish its results, with a list of recommendations on how to fix any problems it uncovers, if any. That report is expected next June.
The relatively tight schedule is likely one factor in why the office is apparently constrained in how broad and deep the investigation needs to go, von Massow said.
“Reducing the scope of the study might increase the chance of getting it done on time,” he said.
An earlier bureau investigation into food price trends found that some companies had colluded to fix the price of bread and baked goods for years, at the expense of consumers. That investigation is ongoing.
Major retail supermarket chains have come under enormous pressure lately on the issue, due to the perception that they are raising their prices more than necessary, under cover of high inflation. Loblaw recently announced it would freeze prices on more than 1,500 products under its in-house brand, No Name, through the end of January as a way to appease consumers.
But the move has only increased industry scrutiny, with many observers saying it’s common for supermarket chains to require their own suppliers to freeze prices every year during the busy holiday season.
“It is industry practice to freeze prices from November 1 to February 5 for all private label and national brand grocery products and this will be the case again this year on all Metro banners,” said a spokesperson for the Montreal-based company. the Metro supermarket chain told CBC News this week.
Supply and demand problems
The Canadian Federation of Independent Grocers, which represents more than 6,000 independently owned and operated grocers across Canada, supports the investigation, spokesman Gary Sands said in an interview.
Unlike the big chains, smaller grocery stores are often at the mercy of the major suppliers, which in some cases are controlled by the major chains.
“Their influence in the market, both at retail and supplier level, has sometimes put independent supermarkets at a disadvantage, particularly when it comes to supply issues,” he said.
“People need to understand … the challenges for independent grocers around that kind of consolidation.”
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