Loblaws is Once Again at the Centre of Alleged Anti-Competitive Behaviour

To say that a significant portion of Canadians are getting fed up with Loblaws’ chain of grocery stores is, at this point, underselling customers’ frustrations with the grocery giant. According to Statistics Canada, grocery prices have risen by 21.4 percent over the past three years, a painful rise that salaries haven’t come close to keeping up with. While Loblaws maintains they had no choice but to raise prices to astronomical levels for consumers, another “no choice” situation is sparking questions about potential anti-competitive behaviour.

Loblaws and their chains of grocery stores have become the ire of enough people that, according to a recent Leger poll, 18 percent of Canadians are either personally participating in a boycott of the giant or have someone in their household doing so. And while the company continues to maintain raising food prices was the only option they had, the fact that the company has almost doubled its profit margin in the last five years begs to differ.

So, at that point, it would be pretty brazen for a company that maintains 27 percent of the market share of Canadian grocery sales to further try and limit customers’ competitive choice, wouldn’t it? That’s the accusation thrown at the company by telecom and media firm Québecor’s CEO Pierre-Karl Péladeau about what’s on offer at The Mobile Shop, Loblaws’ in-store mobile phone kiosk.

Some may remember Mr. Péladeau’s brief stint as the Leader of the Parti Québécois in 2015/16. He’s the son of Québecor’s founder and was the previous owner of Sun Media Corporation. He has levied an accusation of anti-competitive behaviour against Loblaws for prematurely ending its contract with Québecor in favor of offering only Glentel products. Glentel, for those unfamiliar, is a company jointly owned by Rogers and BCE Inc. (Bell Canada), two companies who are no strangers to accusations of anti-competitive behaviour themselves. Glentel operates mobile phone stores such as Wireless Wave.

While The Mobile Shop currently offers products and services from seven providers in its 180 locations, Québecor’s accusation paints a picture of a company working towards gouging Canadians even further while lining their own pockets with an exclusivity deal for a joint venture owned by Canada’s largest telecom companies. The Competition Bureau should conduct a comprehensive investigation into these allegations, especially if it’s designed to help the market dominance of Loblaws, Bell, and Rogers and further restrict competition, not for the benefit of the Pierre-Karl Péladeau’s of the world, but for the benefit of consumers.

It wouldn’t even be the only investigation the Competition Bureau is conducting currently into Loblaws. Just this week, they announced they are conducting an investigation into Loblaws and Sobeys for allegedly using property controls in lease agreements to limit who can use lands. This is allegedly done through restrictive covenants in contracts and exclusivity clauses in lease agreements designed to restrict or exclude competitors, which may give them, according to the Competition Bureau “the ability to exclude actual or potential competitors from selling food products within certain geographic areas or to dictate the terms upon which they carry on business.” We witnessed this in Elliot Lake when No Frills (owned by Loblaws) relocated, preventing competitors from moving into their previous location.

While it is not clear whether the Competition Bureau will take up this call to investigate Loblaws and Glentel for potential anti-competitive behaviour, what is clear is that the government does have the power to further regulate the grocery industry if they won’t conduct themselves in a manner that benefits consumers. Time and time again though, this government, as well as governments before it, have rubber stamped mergers and acquisitions that allow these companies to grow into anti-consumer behemoths. This is exactly what happened with the Rogers-Shaw deal last year, which caused prices to rise by an average of $5 for wireless customers since the deal was finalized. A small amount, to be sure, but Rogers promised to remain competitive, and then immediately decided they didn’t need to once the deal was approved.

At a certain point, it starts to feel like a joke when multiple companies accused of anti-competitive behaviour start joining forces.