Canada’s grocery business controlled by small group of big companies, says Competition Bureau | CBC News

Canada’s grocery business is controlled by large players and needs government assistance to encourage new entrants to bring down prices, a report from Canada’s Competition Bureau says.

The report, published Tuesday, is the result of a probe that Canada’s top competition watchdog launched last year, when concern over food prices hit a fever pitch.

The bureau spent months examining many aspects of Canada’s grocery business, which is dominated by three domestic giants — Loblaws, Metro and Sobey’s owner Empire — along with foreign players like Walmart and Costco.

In the report, the bureau found that the industry is not as competitive as it could be, and consumers are paying the price for it.

“Canada needs solutions to help bring grocery prices in check,” the bureau said. “More competition is a key part of the answer.”

To that end, the bureau recommended four broad policies aimed at spurring competition in the sector. 

They are:

• To establish a Grocery Innovation Strategy aimed at supporting the creation of new types of grocery businesses, specifically ones that only sell online.
• Policies from all levels of government to encourage new independent and international players to set up shop in Canada.
• Introducing legislation to mandate harmonized unit pricing requirements, which will make it easier for consumers to comparison-shop for deals.
• Limit property controls, which currently restrict how real estate can be used by competing grocers, making it difficult, or even impossible, for new stores to open.

“Change will take time,” the bureau said. “These solutions will not bring Canadians’ grocery bills down immediately. But by acting now, governments at all levels can take steps toward creating a more competitive grocery industry in Canada.”

The bureau’s study found that while most countries are currently grappling with high prices for groceries, it’s a different situation in Canada because the market is more consolidated than it is elsewhere. 

A big problem is that in Canada, the main chains own discount rivals more than they do elsewhere.

“Loblaws owns No Frills and Maxi, Sobeys owns FreshCo, and Metro owns Food Basics and Super C,” the bureau said. “This is different from other countries where large grocers compete against lower-priced options like  ALDI and Lidl.”

Big chains have unfair advantages

Independent grocery chains are often a great alternative, but they don’t take up as big a portion of the market as they do elsewhere. That’s because many of them are forced to buy their wares from the big chains in the first place.

“According to independents, this dependency makes it more difficult for them to compete on price,” the bureau said.

Large chains also get paid by suppliers to put their products on shelves in the first place. 

“Independent stores generally aren’t, and that can put them at a disadvantage,” the bureau said.

Even finding real estate to open a new store can be a challenge, because they generally need a large, accessible space with the capacity for parking.

“Many of the locations that could support a new grocery store are already controlled by the grocery giants,” the report found.