Canada's federal competition watchdog is inviting market participants to provide input about property controls in the country's grocery industry as part of an ongoing investigation into Sobeys and Loblaw.
The Competition Bureau said it is examining whether restrictions imposed by grocery retailers are impacting competition and has promised to keep any experiences submitted confidential.
"Property controls may shield grocery stores from competition by preventing businesses from opening a retail food store or limiting the products competitors can sell," the bureau said in a statement. "As a result, consumers may be denied the benefits of competition, including lower prices, better quality and more choice."
Exclusionary lease provisions are relatively common in the United States as well, especially in malls with a long list of retail tenants. Exclusionary provisions "can provide a tenant with the exclusive right to operate a business, and prevent another tenant from using its space in certain ways," according to NAIOP, the Commercial Real Estate Development Association.
In one well-known case, the United States grocery chain Winn-Dixie that now is part of Aldi fought a legal battle for years to keep other retailers in centers where the chain operated from selling groceries. Winn-Dixie's claim that groceries included a “multitude of non-food items, such as detergents and paper towels," initially was rejected," according to a report in NAIOP's Development magazine.
But a higher court reversed the lower court's ruling and said that “to find the plain and ordinary meaning of words, one looks to the dictionary,” and that the “commonly recognized definition of the term groceries includes more than just food," according to the article.
Seeking more competition
The Canadian government has been pushing for more competition in the grocery sector and has even investigated bringing in competitors from other countries to no avail.
Neither Sobeys nor Loblaw company officials commented.
In June, the Bureau obtained two court orders for an investigation against the parent companies of Sobeys and Loblaw.
The Competition Bureau said it now looking for:
- any instances where property controls have prevented domestic or international grocers or food retailers from opening a store in Canada;
- any instances where property controls have restricted the operations of a food retailer by, for example, limiting the sale of specific food products; and
- the benefits and drawbacks of property controls for food retailers, landowners or landlords.
Sobeys parent Empire Co. has filed a legal brief against the investigation and said the company is being unfairly targeted.