Canada’s grocery industry needs a new rulebook: CFIG

Trade association says code of conduct is needed to repair an ailing retail food system

The Canadian Federation of Independent Grocers (CFIG) is renewing its call for Ottawa to introduce a code of conduct for the industry in light of the latest revelations in the growing bread price-fixing scandal.

In documents revealed at the end of January, the Competition Bureau alleges Canada Bread Company Ltd. and George Weston Ltd.’s senior officers communicated directly to raise prices at least 15 times between about 2001 and 2016.

The suppliers would allegedly meet with Canada’s leading food retailers—Loblaw Companies Ltd., Walmart Canada Corp., Sobeys Inc., Metro Inc. and Giant Tiger Stores Ltd.—to get their approval for the artificial hike, usually 7 cents. The retailers agreed to the boost, along with a 3-cent retail increase for themselves, on the condition the suppliers ensured all retailers were co-operating, the documents said.

“We have always maintained that the bread is just one of many practices in the industry that we feel are, what we would diplomatically call, distortions,” he said.

READ: CFIG says it did not request investigation into bread price fixing

While the new details about the scale and scope of the price-fixing arrangements were shocking, they only confirm that Canada’s retail food system is in need of fundamental repair in the form of a code of conduct, said Gary Sands, CFIG’s senior vice-president, public policy and advocacy.

While the alleged wrongdoing in this case originated with suppliers, it was sustainable because of a highly consolidated industry where a few large retail players have a lot of power.

“The bread issue underscores why we need a code of conduct,” he said. A code of conduct, which CFIG has sought for years, could bring more transparency to the industry and sustain normal, fair market behaviours and practices. Such codes have been enacted in the United Kingdom and Australia, providing fair dealing rules and policies for the industry.

“Independent grocers do have a right to expect fairness in the marketplace,” said Sands.

CFIG isn’t alone in its call for reforms.

Last month, when it was revealed Loblaw had been co-operating with the Competition Bureau (in return for immunity), the Food & Consumer Products of Canada, expressed concern about market consolidation and, specifically, Loblaw’s “abuse of dominance.” FCPC represents many of the largest food manufacturers in the country—though not Weston, the parent company of Loblaw, Canada Bread or Maple Leaf, which owned Canada Bread until 2014.

 However, FCPC stops short of calling for a code of conduct, which it supported in 2014.

 Instead, CEO Michael Graydon said there was an “urgent need” for a new “fair principles framework.”

 “A fair business principles framework model has worked well in markets with similar imbalances like the U.K and Australia as a way of achieving fairness, sustainability and healthy market competition …. A similar framework in Canada may reduce the likelihood or need for further industry investigations into trade relations.”

 FCPC said it was consulting with its membership to determine what such a framework could look like in Canada.

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