Competition Bureau investigates Sobeys and Loblaw over potential anti-competitive property controls

The companies were ordered to produce records pertinent to the Bureau’s investigations
Competition Bureau investigates Sobeys and Loblaw over potential anti-competitive property controls

The Competition Bureau has secured two court orders to advance its investigations into Empire Company Limited's and George Weston Limited's use of property controls.

Empire is the parent company of Sobeys Inc., while George Weston oversees Loblaw Companies Limited. These orders, granted by the Federal Court, mandate the companies to produce records and information pertinent to the Bureau's investigations.

These investigations focus on Sobeys and Loblaw's potential anti-competitive use of property controls in the Halifax Regional Municipality. Specifically, the Bureau is examining whether these companies are using exclusivity clauses and restrictive covenants to limit competition in the retail sale of food products. At this stage, no conclusion has been reached about wrongdoing.

Property controls can significantly impact market dynamics by limiting how real estate is used, particularly by competing food retailers. These controls include exclusivity clauses, typically in commercial leases, preventing landlords from leasing space to competing tenants. On the other hand, restrictive covenants are land-use restrictions that prohibit the purchaser or owner of a commercial property from operating or leasing the space to certain types of businesses.

According to the Competition Bureau, its investigations aim to uncover the extent and impact of such property controls across Canada, assessing whether they hinder competition by making it challenging for new businesses to enter the market.

Sobeys Inc., with its wide array of grocery store brands including Sobeys, Safeway, IGA, FreshCo, Foodland, Longos, Farm Boy, Thrifty Foods, Les Marchés Tradition, and Marché BoniChoix, operates 1,600 stores across all ten provinces.

Meanwhile, Loblaw Companies Limited operates over 2,400 stores nationwide under banners such as Loblaws, No Frills, Real Canadian Superstore, Provigo, Zehrs, Fortinos, Valu-mart, Dominion, Atlantic Superstore, Your Independent Grocer, City Market, Extra Foods, T&T Supermarket, and Maxi.

The Federal Court orders Empire and George Weston to provide documents and information relevant to the investigation. Property controls, such as exclusivity clauses and restrictive covenants, can reduce competition by restricting how real estate can be utilized, particularly affecting competitors' new store openings. These investigations will help determine if Sobeys and Loblaw are using such controls to limit competition unfairly in the retail food market.

As the Competition Bureau continues its investigations, it remains focused on ensuring a competitive market landscape, which is crucial for businesses and consumers in Canada.