The Competition Bureau investigates Loblaws and Sobeys for alleged anticompetitive property controls
The Competition Bureau has obtained two court orders requiring the parent companies of Loblaws and Sobeys to provide information related to its investigation into alleged anticompetitive conduct.
According to BNN Bloomberg, the bureau is examining the use of property controls in the grocery sector, which are clauses in lease agreements that restrict other potential tenants and their activities.
The bureau argues these controls hinder competition in the grocery sector. In May, the competition commissioner applied in Federal Court to order Empire Cos. Ltd. and George Weston Ltd. to submit records about real estate holdings, lease agreements, customer data, and other records.
The bureau stated Tuesday that this information will help determine whether Sobeys and Loblaws are imposing anticompetitive restrictions that negatively affect competition in the grocery industry. The bureau clarified that there is no conclusion of wrongdoing at this time.
Spokespeople for Empire and George Weston did not immediately respond to requests for comment.
Previously, Empire had opposed the investigation, stating in a separate court application that the probe gave the commissioner “the appearance of a lack of independence” and denied that property controls are anticompetitive.
In May, the Competition Bureau filed a motion to strike Empire’s application for judicial review. Spokesperson Sarah Brown confirmed Tuesday that the motion was granted, but said Empire is appealing the decision.
Loblaws’s parent company is cooperating with the bureau’s review, spokesperson Catherine Thomas said in May on behalf of George Weston Ltd.
“Restrictive covenants are very common in many industries, including retail. They help support property development investments, encouraging opening of new stores and capital risk-taking,” she said in a statement at the time.
The commissioner’s probe focuses on the companies’ operations in Halifax and across the country. Court documents filed in May describe Empire’s and George Weston’s holdings in real estate investment trusts (REITs), which count the companies’ own grocery banners as major tenants.
Through a subsidiary, Empire holds a 41.5 percent interest in Crombie Real Estate Investment Trust, while George Weston has a controlling ownership interest of 61.7 percent in Choice Properties Real Estate Investment Trust.
The Competition Bureau revealed its investigation into the use of property controls in the grocery sector in February.
At that time, deputy commissioner Anthony Durocher told a House of Commons committee that property controls could hinder growth for independent grocery stores and chains and could also be a barrier for foreign players looking to enter the Canadian market.
Industry Minister François-Philippe Champagne has expressed interest in attracting a foreign grocery chain to Canada to boost competition.
