Groceries | Rising prices under the magnifying glass of the Competition Bureau

Faced with the constant increase in the consumer’s grocery bill, the Competition Bureau of Canada has decided to scrutinize the increase in food prices and to take an interest in the competition between the main retailers. A study with a “limited” scope, however, fear the experts consulted.

Nathaelle Morissette
The Press

Coming nearly a week after the tabling of a New Democratic Party (NDP) motion calling on the government to implement an “affordable and fair food strategy that tackles the greed” of food retailers, the announcement made by the organization on Monday – which will launch a major study on the issue – has been welcomed by many industry players.

Joined by The Press, the main retailers, Metro, Loblaw (Maxi, Provigo) and IGA, refused to comment on the Competition Bureau’s decision, preferring to leave it to the Retail Council of Canada (RCCC) to react. While RCC views this process favorably, several experts have doubts about the Bureau’s ability to change the situation.

“The question I ask myself is what is this study likely to change? “Says Pierre Larouche, professor of competition law at the University of Montreal.

It’s because the organization that wants to examine “competition in the grocery sector and the reasons why prices are so high today” does not intend to “focus on issues relating to purchase of groceries from suppliers by retailers,” reads a document posted on the Competition Bureau’s website following Monday’s announcement.

It is recalled that “this aspect of the sector is subject to the establishment of a code of conduct which is currently being negotiated between the main stakeholders”.

However, Mr. Larouche is rather of the opinion that the Bureau should study the entire chain, and not only the price of products once placed on the shelves. “It’s concerning because the Bureau cites the studies that have been done in other countries, and in other countries you always look at the whole supply chain because if there are problems , it is not strictly at the retail level, there may be some downstream, with suppliers, he recalls. For me, it’s a bit limiting. »

The specialist also wonders to what extent the Competition Bureau will succeed in establishing an overall picture of the situation since it does not have the power to compel companies to reveal information. “When there is a power of coercion, we can force companies to disclose business secrets, he recalls. In this case, we will end up with a study that will provide a lot of information on easily observable factors: price trends, overall profit margins. But I’m not sure we’re going to get a lot of information on specific practices or solutions. »

For his part, Sylvain Charlebois, senior director of the Laboratory of Analytical Sciences in Agrifood at Dalhousie University, affirms that the fact of completely dodging a whole section of the industry, that concerning for example the purchase of products such as cheese , cookies or frozen pizzas by retailers from suppliers, is “disappointing”.

“It bothers me, he launched bluntly. It demonstrates a poor understanding of the dynamics of food distribution,” he said, adding that he did not expect the study to have an impact on the daily lives of consumers going to the grocery store. .

“There is still a mention saying that if the Competition Bureau realizes that the upstream relations affect the detail, it will look at that. He keeps the door open,” said Mr. Charlebois, however.

The code of conduct in danger?

And it is precisely this leeway that the organization keeps that worries the Council of Quebec Dairy Industrialists (CILQ), a group representing many cheese and yogurt producers. We do not want this study to slow down the work leading to the development of the code of conduct.

“We hope that [l’étude menée par le Bureau de la concurrence] will not disrupt this exercise,” said CILQ President and CEO Charles Langlois. He fears that retailers are more cautious in their discussions for the development of the code, preferring to wait for the conclusions of the study of the Competition Bureau.

The introduction of a code of conduct aims to improve the sometimes difficult relationships between supermarkets and their suppliers. On the initiative of the Minister of Agriculture, André Lamontagne, supported by his provincial counterparts, industry players such as retailers and suppliers are currently working on the development of this guide.

At the CCCD, which notably represents Metro, Loblaw, IGA, Walmart and Costco, we say we are “happy” to see that the Competition Bureau wants to “shed light on the entire supply chain”.

According to Michel Rochette, president for Quebec of the CCCD, the organization will have no choice but to dwell on the mechanics of price fixing between supermarkets and their suppliers. “The retailer has little leeway in pricing on the shelves. You can’t imagine doing a study on prices without looking at everything that led to these prices. Inevitably, they will have no choice but to look upstream. »

According to an Angus Reid poll conducted in August, 78% of Canadians believe that supermarkets are taking advantage of inflation to raise their prices. “In this study, we will focus on competition in the grocery sector and the reasons why prices are so high today, can we read on the Competition Bureau’s website. Some say it’s because grocers have to pay more for the products they sell because of inflation. Others say grocers have raised their prices because there is not enough competition. We want to better understand these issues. »

The organization intends to speak with retailers of all sizes, with representatives from different levels of government as well as with subject matter experts. The study’s findings are expected to be published in June 2023.