With food inflation running hot and grocery store profits reaching record highs, the Competition Bureau is looking into whether the sector is contributing to the rising cost of groceries.
Here’s what that means, and what could come out of it.
Why is the Competition Bureau looking into grocery stores?
Canada has three major grocery chains that control most of the market: Loblaw Companies Ltd., Metro Inc., and Empire Foods Ltd.
Critics argue that more competition in the sector would contribute to fairer prices for consumers.
The Bureau says it’s studying whether the government can help improve competition in the grocery sector, and looking at why food prices are so high.
What is a Competition Bureau study?
A market study is different from an investigation. During a market study, the Bureau examines a sector and looks for barriers to competition within it, such as regulations or policies.
Conversely, an investigation involves the Bureau looking into allegations of wrongdoing by one or more companies, or within a specific sector.
For example, the Bureau launched an investigation in 2017 into allegations that suppliers and retailers were colluding to fix the prices of bread products.
How does it work?
For the purposes of a market study, the Bureau says it does not have the power to force grocery retailers to turn over documents and data they use for pricing decisions. It will instead rely on publicly available information and provided information, and is planning to speak to retailers, government officials, experts and ordinary Canadians.
It also plans to draw on prior investigations in its work, including those by foreign agencies that have investigated grocery competition in other countries.
What could come out of the study?
The Bureau notes that this is a study, not a law enforcement investigation, and it is not looking into specific allegations of legal wrongdoing. But if it uncovers potential legal wrongdoing, it says it will investigate and take appropriate action.
It says it will make recommendations for governments to help to improve competition, and will release its findings in June 2023.
How often does this occur in Canadian sectors?
The Bureau does not launch market studies very often. The last one it launched was the Digital Health Care Market study in July 2020, which is ongoing.
Over the past 15 years it has completed fewer than 10 studies on areas including the broadband industry, financial technology, generic drugs and self-regulated professions.