Amy Crossley carefully selected meat specials while contemplating the challenges faced by parents with young children to feed. Expressing concern about high grocery bills, she mentioned spending $500 per month at a regular store for just two people, now that her children have grown up and moved out. Crossley was shopping at Gateway Meat Market, a popular independent store in Dartmouth, N.S., known for its attractive deals that attract customers from across the province. Customers often urge the store to expand to other locations to make their offerings more accessible.
An investigation initiated by the Competition Bureau Canada since the previous year is examining the potential limitations imposed on new grocers intending to operate in the Halifax Regional Municipality. The focus of the investigation is on property controls utilized by Sobeys and Loblaw, legal mechanisms that could hinder competitors from establishing stores on specific properties.
While the primary attention is on the Halifax area, the investigation extends to property control practices nationwide. The inquiry has not yet reached any conclusions regarding misconduct but has encountered some unexpected developments, such as attempts by Sobeys’ parent company to halt the investigation and an announcement by Superstore’s parent company committing to eliminating property controls from its HRM stores in February.
The competition bureau emphasized the adverse impact of property controls on smaller competitors, labeling them as significant barriers to entry and expansion in the Canadian market. The bureau advocates for increased competition, believing it benefits consumers by lowering prices and fostering innovation.
Gateway Meat Market, founded in 2007, has not faced property control challenges. However, co-founder Tamara McKay noted the difficulties independent businesses encounter in selecting suitable locations, requiring substantial property and a deep understanding of the grocery industry to anticipate growth.
James Baxter, an associate professor at Dalhousie University’s Schulich School of Law, highlighted the scarcity of commercial spaces capable of accommodating grocery stores in urban settings. Baxter underscored the limitations imposed by property controls, particularly restrictive covenants and exclusivity clauses, which impede new entrants in the grocery market.
The competition bureau’s scrutiny of Sobeys and Loblaw stems from their significant market shares in Canada, prompting court orders for the disclosure of information relating to property controls, leases, and business strategies. Empire challenged the investigation, calling it a burdensome endeavor without a clear basis for focusing on Halifax.
Although Manitoba has taken steps to address property controls in the grocery industry, other provinces and territories have yet to follow suit. Concerns persist over the impact of these controls on market competition and consumer access to diverse food options.
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