Canadian Manufacturing

Competition Bureau investigating how Loblaw treats suppliers

Federal regulator probing certain practices related to "pricing strategies and programs" by Loblaw with respect to wholesale suppliers



OTTAWA—The federal Competition Bureau is investigating the relationship between grocery giant Loblaw Companies Ltd. and a number of its suppliers.

A spokesperson for the regulator confirmed in an email that the bureau is probing certain practices related to “pricing strategies and programs” by Loblaw with respect to its suppliers which “could raise concerns under the Competition Act.”

“The bureau is looking at these practices and the impact that they could have on competition in the marketplace,” spokesperson Greg Scott said.

When the Competition Bureau approved Loblaw’s acquisition of Shoppers Drug Mart Corp. earlier this year, it imposed certain “behavioural restrictions” on the grocer in connection with its agreements with suppliers for up to five years.

The bureau was concerned that without restrictions on certain programs and agreements, the deal would likely lead to higher wholesale prices paid by other retailers and, in some circumstances, higher prices for consumers.

The federal regulator also said at the time that it would continue to investigate certain pricing programs and agreements by the company.

Loblaw called the probe the latest step in that review.

“Given it’s the nation’s largest-ever retail acquisition, we understand the bureau’s interest in maintaining competition in the marketplace,” Loblaw spokesperson Kevin Groh said in a statement.

“We don’t believe our commitment or practices are inconsistent with a competitive market. But, we continue to co-operate with the bureau and have worked to provide them the clarity they require.”

Scott said the bureau filed 12 applications with the Federal Court last week for orders that would require certain grocery suppliers to provide records and written returns of information to the bureau.

“It is important to note that there is no allegation of wrongdoing by any of these companies,” he said.

“While I cannot discuss the specific details of our investigation for reasons of confidentiality, I can say that we are seeking information regarding pricing strategies and programs by Loblaw, with respect to its suppliers, which is relevant to our investigation.”

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