Canada’s competition watchdog, the Competition Bureau, has finalized an agreement with Empire, the parent company of Sobey’s, to restrict or eliminate the use of property controls due to anti-competitive concerns. Property controls, such as exclusivity clauses and restrictive covenants, were identified as practices that hinder competition by preventing rival grocery stores from opening nearby or restricting what products can be sold by neighboring retailers.

Empire Company Limited, the owner of various grocery chains including Sobeys, Safeway, and Freshco, has been facing pressure from the Competition Bureau to eliminate these property controls. The bureau initiated an investigation in 2024 into the use of property controls by major grocery chains like Loblaw and Sobeys, which eventually led to commitments from both companies to address the issue.

Economist Jim Stanford highlighted the significance of this agreement, emphasizing the positive impact it will have on consumers. The Bureau’s scrutiny into the grocery sector’s property controls stemmed from concerns over rising grocery prices, with a specific focus on how these controls affect competition and consumer choice.

While Empire is now required to cease or limit the use of restrictive covenants, a limited application of exclusivity clauses is allowed under the agreement. This provision permits the company to restrict direct competitors from opening stores in shared developments, with the Competition Bureau providing guidance on when such clauses may be justifiable.

The Competition Bureau’s enhanced enforcement powers, granted earlier this year by the federal government, are aimed at fostering a more competitive market that facilitates the entry of new players like independent grocers, butchers, and bakeries. This move is expected to drive down prices, increase choice, and spur innovation in the grocery sector.

Looking ahead, the Competition Bureau will continue its efforts to address property controls within the industry, including examining barriers to competition and investigating various aspects of Canada’s food supply chain. Economist Jim Stanford remains cautiously optimistic about the impact of these measures, noting the need for ongoing vigilance in regulating large players in the food industry to ensure a fair marketplace for all.