Loblaws agrees to change 'anticompetitive conduct' and it could lower grocery prices

Loblaws has committed to ending property controls in Canada, a move that the country's competition watchdog says is in favour of shoppers.

The Competition Bureau announced that it's monitoring the grocery giant's recent pledge to eliminate property controls, or what it calls "anticompetitive restrictions on the use of real estate."

This is the result of an investigation into the alleged "anticompetitive conduct" by Loblaws and Sobeys that began last March. The government agency ordered the grocers to surrender records about real estate holdings, lease agreements, customer data and other related documents.

Last August, the regulator announced that businesses taking advantage of property controls in commercial real estate could be fined.

What are property controls, and how do they affect grocery shoppers?

There are two types of property controls: exclusivity clauses and restrictive covenants.

Generally found in commercial leases, exclusivity clauses prohibit the landlord from leasing space to another tenant that 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.

Essentially, these clauses in lease agreements can prevent other potential grocers from opening in the same plaza, area or space that has recently been vacated by a Loblaws or Sobeys store. It effectively removes competition and choice for consumers.

Loblaw Companies Ltd. — which owns stores like Shoppers Drug Mart, Real Canadian Superstore and No Frills — has committed to:

• Eliminating existing restrictive covenants, planning to either remove them from land titles or inform landowners that it will not enforce them
• Not enter into new restrictive covenants
• Waiving all exclusivity clauses in the Halifax Regional Municipality and in communities across the country where it operates the only grocery store
• Granting waivers for, and not entering into, exclusivity clauses that prohibit other tenants from operating a retail store that sells only a subset of the products typically sold by a grocery store. For example, a butcher, bakery or store that sells produce
• Not enforcing, or entering into, exclusivity clauses that extend beyond the land where the Loblaw store is or will be located
• Not including restrictions on the sale of food products in new leases for Shoppers Drug Mart (Pharmaprix in Quebec), effective November 2024

How could Loblaws' pledge help Canadian shoppers?

So what does this have to do with the average Canadian? As food prices continue to rise amid the United States-Canada trade war, it could mean more choices and cheaper grocery bills for shoppers.

"The steps Loblaw is taking towards eliminating property controls will allow for healthier competition in the grocery sector," explained Commissioner of Competition Matthew Boswell, in a statement. "More competition can drive lower prices, increased innovation and more convenience for consumers."

In a statement from February, Loblaws says it "welcomes competition, which helps to provide value to Canadians."

Only time will tell if these promises lead to more affordable groceries.

In the meantime, the Bureau's investigation into property controls in the grocery industry continues. This includes monitoring Loblaw Companies Ltd. to ensure it sticks to its promises.