Quebec's food sovereignty threatened if Metro leaves province: report

3/28/2013

Metro must remain under Quebec head office control or else the province’s food sovereignty is threatened, concludes a report by two think-tank researchers from Laval University.

In their report, researchers François L’Italien and David Dupont of the Institut de recherche en économie contemporaine conclude that food distribution in Quebec is made up of an oligopoly in which “the only Quebec player, Metro, appears vulnerable to takeover.” The two other major food distribution players in Quebec are IGA, owned by Sobeys, and Provigo, owned by Loblaw. Combined, the three companies control about 70 per cent of Quebec’s food market.

The report was published just prior to a March 22 working meeting called by Quebec Agriculture Minister François Gendron on the evolving concept of food sovereignty, which would increase the promotion of Quebec-made foods.

During the meeting, Quebec’s agricultural union, the Union des producteurs agricoles, called for increased promotion of the Aliments du Québec logo as Ontario does with its Foodland campaign.

Metro is susceptible to unsolicited takeovers due to its shareholder composition, the report added.

Since the mid-1990s, control of Metro has gone from the merchants who founded the company to institutional investors, who are mainly outside Quebec.

According to the report, Provigo’s sale to Toronto-based Loblaw had negative consequences for Quebec and a Metro takeover would have similar effects.

Since the purchase, Provigo store brands have been replaced by Loblaw’s President’s Choice, the number of employees in Provigo’s Montreal head office has declined from 1,200 to 300 and a Quebec City distribution centre has closed.

The report decried “the weak weight of Quebec shareholders in the financial structure of Metro and the preponderant role of investment funds in its governance.”

It recommended Quebec’s pension fund, the Caisse de dépôt et placement du Québec, be able to obtain a greater share of Metro to ensure it stays in Quebec hands.

Last year, Quebec’s former Liberal government vowed to step in to block a $1.8 billion bid by U.S. home improvement chain Lowes for its Quebec-based counterpart Rona, calling Rona a “major strategic asset for Canada.”

Metro communications advisor Geneviève Grégoire said a statement made last August by Metro CEO Eric La Flèche is Metro’s only comment on the matter. Said La Flèche: “As a general rule, government should intervene as little as possible in the affairs of business. To limit state intervention, the best thing would be to modify corporate laws to give boards of directors the same defensive tools that exist in most American states.”

Such a change, which would allow boards to reject takeover bids if they’re not in the interest not only of shareholders, but of employees, suppliers and communities, is now being eyed by Quebec’s current finance minister, Nicolas Marceau.

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