The big boss of Empire, the parent company of Sobeys, which operates the IGA brand in Quebec, argued that there is no evidence that a code of conduct for grocers would increase food prices in Canada.
The company’s president and CEO, Michael Medline, assured that he would not support the adoption of a code of conduct if he thought it would have an inflationary effect, during a Council event Canadian retail trade in Toronto on Tuesday.
The first leader to speak out in favor of such a charter, Mr. Medline even hopes that it could help reduce the price of food in the future. However, he clarified that it is not a panacea “for all the problems that drive up prices”.
Loblaw and Walmart would not sign the code as it is currently written, they announced last fall, effectively blocking adoption of the text that was almost complete.
According to its supporters, the code of conduct will help level the playing field for suppliers and small food retailers by introducing a framework for negotiations between industry players. This would also include a dispute resolution process.
For their part, Loblaw and Walmart fear that the text will lead to an increase in the price of the grocery basket.
Imposed?
This impasse could result in the code of conduct being imposed, rather than voluntary. The House of Commons committee that studies food prices has told Loblaw and Walmart that if they don’t adhere to it, it will recommend that the code become law.
Michael Medline said he is frustrated by the delays in moving this project forward, but he continues to believe there is a way to adopt a voluntary code instead of imposing regulations. “It’s high time to put an end to this,” he said.
There cannot be a code without all the retailers, he added in an interview on the sidelines of the event.
“I think we are at an impasse, trying to find a way to put pressure on the parties who do not want to sign,” he said, referring to a “play of bluff”.
Discussions about the code of conduct are underway with all retailers, Doug Nathanson, Empire’s executive vice president, chief development officer and general counsel, said in an interview.
“We’re not giving up, so we’re not at a standstill. We’re trying to get everyone’s consensus,” Nathanson said.
Industry practices
For the boss of Empire, this code would represent a better way of doing business.
When Michael Medline joined the grocery industry after working at Canadian Tire, he says he was surprised to learn about some of the practices plaguing the sector.
“I was simply shocked when I arrived in [le milieu de] the grocery store… the way the industry did business,” he said.
Among the practices he criticizes are fees such as those imposed by Loblaw and Walmart on suppliers in 2020 to help finance their infrastructure investments.
Although discussions of a code preceded this development, Medline believes it was the final straw, ultimately pushing the industry to begin developing a code.
Bread prices
In his speech, Mr Medline also called on the Competition Bureau to end its ongoing investigation into bread price-fixing, calling it “misguided from the start”.
He said Empire did not participate in fixing the price of bread in Canada and that the ongoing investigation damaged the retailer’s brand.
“We have repeatedly called on the office to end its investigation and clear our name,” he said. Instead, their investigation drags on and the cloud above our heads remains. »
The Competition Bureau began investigating alleged bread price-fixing cartels in January 2016. Weston Foods and Loblaw, both subsidiaries of George Weston at the time, had already admitted to their participation in a “fixing cartel”. industry-wide pricing” and were granted immunity from prosecution by the Competition Bureau in exchange for their cooperation.
At least $1.50 was artificially added to the price of a loaf of bread during the 16-year conspiracy involving Canada’s largest bakery wholesalers and grocery retailers, the Competition Bureau alleged in court documents in 2018.
In June 2023, Canada Bread was fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act. The Competition Bureau said this was the highest fine ever imposed by a Canadian court for such a reason.
In an interview, Mr. Medline said he believes allegations of bread price-fixing have undermined confidence in the grocery industry, paving the way for further declines in confidence amid inflation. food and accusations that grocers were taking unfair advantage of it.
“It was the start of a downgrade in the reputation of the industry,” he said.