Competition Bureau to investigate grocery store competition

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Amidst rising food prices and increased political scrutiny of grocery store profits, the Competition Bureau says it’s launching a study of grocery store competition in Canada.

The bureau says it will conduct the market study with the goal of recommending measures that governments can take to improve competition in the grocery sector.

In a notice published October 24, 2022, the Competition Bureau points out many Canadians buy groceries from stores operated by one of three companies: Loblaws, Sobeys, and Metro. Other significant retailers include Costco and Walmart, as well as independent grocers.

The launch of the study comes days after Statistics Canada’s latest consumer price index showed food price inflation at 11.4 per cent year-over-year, the highest it’s been since 1981.

“In this study, 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,” the Bureau says.

The study will seek answers to three main questions:

  • To what extent are higher grocery prices a result of changing competitive dynamics?
  • What can we learn from 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?

While it appears the Bureau will be strictly focused on grocers’ market power regarding prices charged to consumers, Mike von Massow, economist at the University of Guelph, suggests the Bureau should be looking at the grocery chains’ interactions with suppliers:

Comments and submissions for the study must be sent in by December 16, 2022 (comments can be submitted here). The Competition Bureau says it will conduct stakeholder engagement and research in early 2023, with a final report to be published in June 2023.

MPs on the House of Commons agriculture committee will also be investigating grocery pricing in the coming weeks. Executives from the large grocery chains will be called to appear before the committee following the passage of a motion from NDP ag critic Alistair MacGregor to investigate food price “greedflation.”

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