It smells scorched at the grocery store. But don’t rely too much on the Competition Bureau to sniff out the problems.
It’s quite sad.
Canada is the blessed land of oligopolies, not only in food, but also in transportation, telecommunications, financial services, to name just these sectors.
The least we could do is have a watchdog with enough teeth to counterbalance them, on behalf of all consumers who are tired of paying too much.
Unfortunately, we are far from the mark, as we see at the grocery store, which has become the sad symbol of the meteoric increase in the cost of living since the pandemic.
The annual increase in the price of the grocery basket of 11%, a record for 40 years, is hurting households a lot. And 2023 will give them no respite, as prices will rise another 5-7%, according to the 13e edition of the Annual Food Price Report unveiled on Monday1.
While 23% of Canadians go hungry, grocery stores are making record profits.
But before you cry “food greed” like NDP Leader Jagmeet Singh, who isn’t afraid of verbal inflation, let’s get this straight.
That grocers see their revenues and profits increase year after year is nothing outrageous. The opposite would be worrying: it would lead to closures from which the clientele would be the first to suffer.
That grocery stocks are up about 15% this year while the stock market is down 3.5% isn’t outrageous either, since it’s a defensive sector that’s always does better in times of downturn.
The real question is whether grocery stores have taken advantage of the pandemic to unduly increase their profit margin.
And here, it goes downhill for Loblaw, whose recent performance surpasses that of the past few years, according to a study by the Laboratory of Analytical Sciences in Agri-Food at Dalhousie University2.
Grilled during a parliamentary inquiry this week, the company has defended itself from taking advantage of inflation to increase its prices excessively.
Who to believe?
For now, the mystery remains. Who can tell if grocery prices are inflated, by how much, and who is to blame in the supply chain.
It is not the investigation launched in October by the Competition Bureau that will tell us much more, since the Bureau does not have the power to demand information from companies, unlike most of its G7 counterparts. , which is absurd.
This serious shortcoming affects the quality of the diagnosis of the Competition Bureau, which is ill-equipped to give the best advice to the government.
In fact, the Office looks like a toothless watchdog. And a dog that doesn’t run fast.
His investigations take forever to complete. Take the bread cartel. Weston and Loblaw admitted to participating in a price-fixing scheme from 2001 to 2015. This prompted a Competition Bureau investigation of five other companies. It’s 2022 and no one has been reprimanded yet. Frankly !
These interminable delays fuel consumer skepticism, who feel that the Competition Bureau’s work is going nowhere. Nothing to encourage them to complain.
It’s necessary that it moves. The Commissioner of Competition, Matthew Boswell, is the first to say so. In a recent speech, he admitted that the current state of affairs constituted “a systemic failure”.
He regrets that the provisions of the competition lawunchanged since 1986, allow for a high level of economic concentration – even monopolies – not seen in comparable countries.
In the food industry, we swallowed without flinching the purchase of Provigo by Loblaw in 1998, that of A&P by Metro in 2005, then that of Safeway by Sobeys in 2013. Today, the three major chains occupy 60% of the market. Adding Costco and Walmart, 80% of the market is captured by five major players who make life difficult for small independents.
In this context, there is a lot of work to do for the Minister of Innovation, Science and Industry, François-Philippe Champagne, who has launched consultations aimed at revising the competition lawin November.
It’s not too soon !
What is happening in our grocery stores proves that we must tighten the criteria surrounding mergers that impede competition and also better equip the Competition Bureau to do a quick and effective investigation.
Let’s not miss the opportunity to whip up the competition with real reform that will boost the productivity that Canadian businesses so badly need, while limiting the inflation that is hurting consumers so much.