Sobeys’ owner, Competition Bureau reach agreement on property controls

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeNewsSobeys' owner, Competition Bureau reach agreement on property controlsEmpire Co. Ltd., the grocery chain behind Sobeys and Farm Boy, has formalized commitments to restrict use commercial lease covenants that can lessen competitionCompetition authorities have been looking into use of covenants and exclusivity clauses in commercial leases under the umbrella of “property controls” for a few years, a professor says. Photo by Peter J. Thompson/National PostThe grocery store chain that operates under banners such as Sobeys, Farm Boy and IGA on Tuesday agreed to limit its use of commercial lease conditions that make it difficult for others to open and operate competing grocery options.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe agreement with the Competition Bureau, which was registered with the Competition Tribunal, makes Empire Co. Ltd.’s commitments legally binding and enforceable and could potentially help bring down grocery prices.“The agreement with Empire removes barriers to competition and will support new entry and increased competition from retailers selling everyday essential items,” Jeanne Pratt, interim commissioner of competition, said.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try againShe also said the watchdog is committed to identifying and addressing barriers that limit competition across the food supply chain so that Canadians can get lower prices and greater choice.Jennifer Quaid, a professor at the University of Ottawa’s Faculty of Law, said competition authorities have been looking into use of covenants and exclusivity clauses in commercial leases under the umbrella of “property controls” for a few years.Such structures can prevent landlords from leasing space to another tenant that competes with an existing tenant or place limits on what or how products can be sold.“They’re a problem in some markets and that’s why the bureau wants to address them and go after them,” she said, adding that competition authorities are also monitoring the grocery and real estate operations of Loblaw Cos. Ltd.But Quaid said the agreement with Empire is not a “magic bullet” for addressing price concerns.“It’s one piece in a larger puzzle of building conditions in which it’s possible to have multiple players in the grocery market that exert some price pressure to keep prices down on some products,” she said.The bureau in June launched an ongoing examination of competition in Canada’s food supply chain in response to persistent high prices.Food prices rose along with a general inflation trend after the COVID-19 pandemic, stemming in part from pent-up demand after months of restrictions. Inflation has since returned to the Bank of Canada’s target range of two per cent to three per cent, but food prices remained elevated.However, Statistics Canada said grocery price growth in August increased at a slower pace than the all-items consumer price index for the first time since July 2024.The price of food purchased from stores rose 2.8 per cent in August from a year earlier after increasing by 3.1 per cent in July. Prices for dairy products led the deceleration.Quaid said the agreement between competition authorities and Empire is a positive step compared to going to court to fight about the use of property controls.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Empire, however, had already made commitments to change the way it used such controls.The grocery chain issued a statement in July that said restrictive covenants and exclusivity clauses are widely used across various industries and can support investment and sustain developments, especially in underserved communities.But it committed to limiting their use, such as not enforcing or entering into any radius clauses to allow for increased retail activity surrounding its store sites.Empire’s commitments, which also included limiting the geography, product scope and duration of exclusivity provisions in all future grocery store leases and not enforcing or entering into exclusivity clauses restricting specialty food retailers such as butchers and bakeries, were formalized this week through the agreement with competition authorities.John Tyhurst, a former civil litigator who was lead counsel for the commissioner of competition in the merger of Rogers Communications Inc. and Shaw Communications Inc., said the agreement is a positive step for consumers in what continues to be a highly concentrated grocery market that features many other barriers to entry.“The sector would benefit from the emergence of new players and entrants,” he said, adding that other barriers include economies of scale and the buying power of the incumbents.“With affordability on everyone’s mind, the bureau evidently is acutely aware of this.”Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. 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