Competition Bureau seeking input on property controls in grocery industry

The Competition Bureau issued a call-out Monday (Oct. 21), seeking information from grocery retailers and those in the real estate business about restrictive real estate clauses in the Canadian grocery industry.

The regulator said it is seeking input from those in the sector about the restrictions, often referred to as property controls, both in the industry as a whole and as part of its ongoing investigations into Sobeys and Loblaw. The request is part of an investigation into property controls the Commissioner of Competition launched against grocers earlier this year.

The practice involves a grocer adding a clause to a lease or deed—sometimes called a restrictive covenant—to limit the kind of store that can open at a location after the grocer leaves the property.

For example, if a grocery store is moving to a nearby location, a property control clause could prevent a rival or even a more specific business such as a bakery from moving into the old store. 

The restrictions may limit competition by preventing other businesses from opening a retail food store or by limiting the products competitors can sell, the bureau said in a release. 

The Public Interest Advocacy Centre has examined the practice of restrictive covenants.

READ: Competition Bureau obtains court orders in investigation into Loblaw, Sobeys owners

It found the practice can result in food deserts, where neighbourhoods become geographically isolated from healthy food, according to its submission to the Competition Bureau.

The bureau said it is looking for any instances where property controls have prevented domestic or international grocers or food retailers from opening a store in Canada.

It is also interested in any instances where property controls have restricted the operations of a food retailer as well as the benefits and drawbacks of property controls for food retailers, landowners or landlords.

The bureau has asked those in the grocery and real estate sectors to share their experiences confidentially by email.