Federal regulators are actively looking at “pricing strategies” used by Canadian retailing giant Loblaw in its dealings with suppliers.
A spokesperson for the Competition Bureau said Monday the bureau was examining “certain practices” at Loblaw that could raise concerns under the Competition Act, which aims to maintain healthy market conditions.
Loblaw, the largest food retailer in the country, bought Shoppers Drug Mart, the largest pharmacy chain, last year for $12.5 billion.
The mega-deal inevitably brought with it elevated concerns about Loblaw’s increased market power, both in how its priced products consumers would pay and how the larger firm dealt with suppliers.
MORE: Loblaw tests new deep discount supermarket format
A spokesperson for Loblaw said the review was part of an ongoing process initiated earlier this year when the bureau first approved the deal.
“It is the latest step,” Loblaw spokesperson Kevin Groh said in an e-mailed message. “Given it’s the nation’s largest-ever retail acquisition, we understand the bureau’s interest in maintaining competition.”
‘We don’t believe our commitment or practices are inconsistent with a competitive market’
A bureau spokesman confirmed in an email response on Monday regulators are probing “certain practices relates to pricing strategies and programs by Loblaw with respect to its suppliers which could raising concerns under the Competition Act.”
As part of the approval for Shoppers, the competition watchdog said it imposed certain “behaviourial restrictions” on Loblaw, as well as asked the company to sell off several pharmacy locations.
MORE: Loblaw sells off 10 more Shoppers locations
In its analysis of the merger, released in March, the Competition Bureau said it had been “made aware of certain conduct by Loblaw with respect to its suppliers,” according to a statement at the time.
“The Bureau determined that without restrictions on certain Loblaw programs and agreements, the proposed transaction would likely lead to higher wholesale prices paid by other retailers to suppliers and, in some circumstances, higher retail prices for consumers.”
“We don’t believe our commitment or practices are inconsistent with a competitive market,” Loblaw’s Groh said. “But, we continue to cooperate with the bureau and have worked to provide them the clarity they require.”
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