Competition Bureau backs review of antitrust laws amid scrutiny of grocers

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Canada’s top competition watchdog threw its support behind a campaign to revisit competition law amid growing concern around the power that a small group of grocers wield over the vast majority of this country’s food sales.

Legislators have been scrutinizing Canada’s main supermarket conglomerates during the pandemic after some executives at rival companies revealed they had been in contact with one another before cancelling their respective “hero pay” bonuses for frontline workers on the same day last spring.

The House of Commons standing committee on industry, science and technology is launching a study of the country’s competition rules next month, after several MPs on the committee expressed outrage at how the big grocers cancelled the pandemic bonuses, the Financial Post reported earlier this week.

In response, the Competition Bureau told the Post it welcomed the committee’s study and was ready to offer assistance.

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“The Bureau supports any measure that ensures Canada is equipped with modern legislation and tools that are appropriate for the digital age,” Sophie Paluck-Bastien said in an email, adding that officials from the bureau “would be pleased” to share their views with the committee, if invited to testify.

The committee’s interest in competition comes amid increased scrutiny of antitrust laws in a number of countries, in large part due to the growing influence of Big Tech.

“Competition is more important than ever, given the rapid growth of the digital economy and the role of pro-competitive policies in the economic recovery,” Paluck-Bastien said, noting that other developed countries “are already taking action to ensure they have the right tools to tackle competition issues in the data-driven digital economy.”

The pandemic pay controversy has only further highlighted how outdated Canada’s laws have become, said Ambarish Chandra, an associate professor of economics at the University of Toronto who specializes in competition policy.

“Given the current, renewed focus on antitrust issues in the U.S., we seem completely out of date and out of step with the developments that are happening in other countries,” he said “We just aren’t that strict in Canada.”

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Last summer, the industry committee summoned top executives from the three largest grocery chains — Loblaw Co. Ltd., Sobeys’ parent company Empire Co. Ltd., and Metro Inc. — to explain why all three companies cut pandemic bonuses on the same day in June 2020.

At that meeting, Loblaw president Sarah Davis told the committee that she sent a “courtesy email” informing her competitors in advance of her decision to cut pandemic pay. Metro chief executive Eric La Flèche said he made several calls to competitors in May and June to ask whether they planned to end the pandemic pay.

“That is really shocking. I don’t even know where to begin,” Chandra said.

Empire chief executive Michael Medline, however, told the committee that he made sure his legal counsel was also on the call and chose not to give La Flèche an answer.

All three companies have strongly denied any wrongdoing and have said they did not coordinate their decisions to cut the bonus pay.

Competition Bureau Commissioner Matthew Boswell has said publicly that the situation is concerning, but has not opted to pursue the matter because the current law does not treat wage-fixing as a criminal act. Only agreements between competitors to fix the price of goods are considered criminal. The bureau is still investigating a bread price-fixing case in the grocery sector, first announced in 2018.

“I do think the Competition Act in Canada is woefully inadequate for pursuing these things and it would be wonderful to see it amended,” Chandra said.

The move to revisit the act now, against a backdrop of broader competition policy reform, makes sense, said Mihkel Tombak, a professor of strategy at the University of Toronto.

“This is something government’s do every 10 years,” he said. “The industry changes and some of the concerns change pretty fast — faster often than the laws do.”