loblaws canada

Here's what Loblaws and other grocery stores will have to pay for price gouging

Canadians have been experiencing sticker shock at their local grocery stores for months now, with everyday items listed for disgraceful prices due to not just general inflation, but alleged profiteering by greedy corporations.

While Loblaws attempts to peddle $10 butter, $15 Maple syrup and $40 chicken breasts, the supermarket is among those being formally investigated by the Competition Bureau of Canada for potentially increasing prices more than already-bonkers inflation rates in recent months.

This came after StatCan data had revealed grocery prices were rising faster than inflation — 11.4 per cent versus 6.9 per cent in the fall — and that Loblaws profits were through the roof as people struggled to put food on the table.

"Grocery prices in Canada are increasing at the fastest rate seen in 40 years," the bureau wrote in October. "Many factors are thought to have impacted the price of food... are competition factors also at work?" 

As the probe continues, we've now found out what consequences Loblaws, Metro and Empire (which owns Sobeys) could face if found guilty of price gouging — or as NDP Leader Jagmeet Singh says, "taking advantage of inflation to line their pockets" — and what other steps the government might take as a result.

The recommendations come in a newly-released report from the House of Commons Standing Committee on Agriculture and Agri-Food, who Loblaws oligarch Galen Weston was earlier this year called to testify in front of on the topic of food price inflation.

One key remedy on the table is to implement a windfall tax for these companies, which would make them pay a higher rate for above-average profits while also discouraging excess price hikes. 

Also proposed is the formation of a "mandatory and enforceable" Grocery Code of Conduct such as those already in place in countries like Australia and the U.K. The code would be reassessed after one year to measure its efficacy and would provide standardized (and, importantly, transparent) steps for addressing issues such as price increases.

Another good idea put forward in the report is the advent of a standardized unit price labelling model so people can better understand and compare prices for different items at different retailers.

"While the food sector has been facing many of the same cost pressures related to supply chain issues and labour shortages, they have also over the same period recorded an increase in their net income... and also reported an increase in average profit margins," the report reads.

"This situation has led consumer groups and other stakeholders to question how increasing costs are being distributed along the supply chain [and] speculate as to whether Canada’s five largest retailers, who control 80 per cent of the grocery market, are engaged in 'price-gouging,' or using their market power to raise prices faster than the growth in their production costs."

Among the committee's other suggestions, no matter the result of the Competition Bureau's investigation: that the government be more thorough in documenting food supply chain costs, which they should make public; that it better address food waste; that it improve the supply chain by improving infrastucture, digitization, and more; and that it better support food producers.

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