Sobeys and Loblaws competition investigation looks into restrictive property rules

The Competition Bureau is inviting grocers to share insights into the use of property controls in the industry as part of its investigation into Sobeys and Loblaw.

Canada's competition regulator issued the call-out on Monday.

The Bureau says it's examining whether property controls imposed by grocery retailers are harming competition.

How property controls impact shoppers

There are two kinds of property controls — exclusivity clauses and restrictive covenants.

Exclusivity clauses, generally found in commercial leases, prohibit the landlord from leasing space to another tenant who competes with the existing tenant.

Restrictive covenants are restrictions on land that prevent a buyer or owner of a commercial property from using the location to operate or lease to certain types of businesses.

"Property controls may shield grocery stores from competition by preventing businesses from opening a retail food store or by limiting the products competitors can sell," explained the regulator.

The Bureau adds that, as a result, Canadians could be missing out on the benefits of competition, including lower prices, better quality products, and more choices overall.

We’re seeking information from market participants to help us examine whether property controls imposed by grocery retailers are harming competition and to advance our ongoing investigations.

Learn more: https://t.co/IjNezBLpbm pic.twitter.com/8G63QLWfkZ

— Competition Bureau Canada (@CompBureau) October 21, 2024

The information gathered from the call-out will inform the regulator's ongoing investigations into Sobeys and Loblaw's alleged "anticompetitive conduct" through its use of property controls.

The Bureau will be looking for information pertaining to:

• Instances where property controls have prevented domestic or international grocers or food retailers from opening a store in Canada
• Instances where property controls have restricted the operations of a food retailer by, for example, limiting the sale of specific food products
• The benefits and drawbacks of property controls for food retailers, landowners, or landlords

It's asking people in the grocery and real estate sectors to confidentially share their experiences by emailing ControlesdePropriete-PropertyControls@cb-bc.gc.ca.