Loblaw Willing to Eliminate Property Controls, CEO Says
Loblaw Cos. Ltd. chief Per Bank said the grocer is prepared to axe property controls—as long as its competitors follow suit.
Bank penned an op-ed in The Globe and Mail Wednesday (Oct. 30), writing, “We envision a competitive environment in which all new and existing property controls are eliminated. To get to that place would require a level playing field with industry-wide rejection of property controls. We are ready to remove such property controls if others do so.”
Canada’s Competition Bureau launched an investigation into property controls in the grocery sector earlier this year.
In June, it announced it had obtained court orders to investigate the use of these controls by the parent companies of Loblaws and Sobeys — George Weston Ltd. and Empire Co. Ltd. — in Halifax.
Last week, the federal competition watchdog invited market participants to provide input for its investigation.
In a statement, Michael Medline, president and CEO of Empire, told Canadian Grocer the company would welcome the elimination of property controls — but that the decision was in the hands of the federal government.
"We operate in an already dynamic and competitive retail environment. Empire would be pleased to see government eliminate real estate exclusivity clauses, across all retail businesses, including those selling food or pharmacy-related products," Medline said.
Restrictive real estate clauses allow retailers to bar competitors from opening nearby stores. They can also prevent a business from opening up at an unoccupied location if that business is in competition with a previous owner.
In August, the bureau published a guide for the industry following changes to the Competition Act around anti-competitive controls in retail. The agency said these controls may be justified in some cases, but emphasized that it would take appropriate action against companies that fail to comply with regulations.
Bank said changes to the Competition Act and the bureau’s draft guidelines were positive for the industry, but asserted that Canada’s grocery sector is one of the most competitive globally.
“In this country, Loblaw is competing not only against domestic players and local grocers; we are in active competition with global giants. Walmart and Costco, two of the largest retailers in the world, command approximately a third of national grocery market volumes based on Nielsen data,” he wrote in The Globe and Mail.
Metro Inc. CEO Eric La Flèche made similar comments earlier this year.
On the grocer’s second quarter earnings call, La Flèche told analysts, “We compete with large global players. We have strong regional and national competitors. We have strong local independents. We have discounters, dollar stores — you name it. Amazon, Walmart, Costco… This is an extremely competitive market.”
This article was originally reported in sister publication Canadian Grocer.
