Canada's grocery sector coming under scrutiny by Competition Bureau

With food prices on the rise and consumers in mind, the Competition Bureau of Canada is undertaking a market study into grocery store competition.

The examination will look at how governments could combat grocery price increases through more competition in the sector, the independent agency said in a statement on Monday.

The study will consider:

• To what extent higher grocery prices are a result of changing competitive dynamics;
• What lessons can be learned from other countries to increase competition; and
• How governments can lower barriers to entry to stimulate competition.

“Canadian consumers have seen their purchasing power decline. This is especially true when buying groceries. In fact, grocery prices in Canada are increasing at the fastest rate seen in 40 years,” said the competition agency.

"Many factors are thought to have impacted the price of food including extreme weather, higher input costs, Russia's invasion of Ukraine, and supply chain disruptions. Are competition factors also at work? To find out, the Bureau will study this issue."

The agency, which focuses on protecting and promoting competition in Canada, will be examining this issue over the next several months, with plans to have its findings by June 2023.

Submissions from "interested parties" on retail grocery competition in Canada will be accepted until Dec. 16.

This move comes amid heightened political attention on the rising cost of groceries. Last week, the House of Commons unanimously passed an NDP motion calling on the federal government to take steps to tackle "greedflation," including asking the competition bureau to investigate grocery chain profits.

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As well, the House Agriculture and Agri-Food committee has agreed to take on a study into the cost of groceries and inflation in the food supply chain. As part of this work MPs are expected to call on industry stakeholders including grocery executives, economists, and farmers, vowing to "get to the bottom" of rising grocery costs. 

In Monday's statement, the bureau noted that the study is "not an investigation into specific allegations of wrongdoing."

"If we do find evidence during this study that someone may be doing something against the law, then we will investigate and take appropriate action," the agency said.

Sylvain Charlebois, who is senior director at the Agri-foods Analytics Labs at Dalhousie University, said the big grocery chains are dominating the market, to the detriment of independent grocers.

“You need independence to provide choice and bring innovation to the market. It's not happening a whole lot in Canada,” Charlebois told CTV News Channel on Monday, adding that while the study is notable, he isn’t expecting major changes in the industry.

Innovation, Science and Industry Minister Francois-Philippe Champagne called the bureau’s study a “welcome step” that he requested.

“Last Friday, I asked them very specifically to start taking immediate action because we’re seeing what’s going on now in the market,” he told reporters in Ottawa. He said that grocery giants need to know that federal officials are watching “very carefully” and are demanding they look at what they can do to “help consumers now.”

In addition to New Democrat MPs saying they have no doubt that this move is a result of pressure from Parliament’s vote last week, NDP Leader Jagmeet Singh said Monday that the Competition Bureau’s move “shows that his party’s advocacy is paying off for Canadians struggling with the high cost of groceries.” 

“New Democrats have been calling out the corporate greed that is driving up costs for hardworking people for months now and pushing the Liberals and Conservatives to stop siding with rich CEOs of huge grocery chains making millions of dollars while Canadian families are having to decide what groceries they can buy and what they have to put back. It’s a win for everyday people that the Competition Bureau is listening,” Singh said in a statement.