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Competition Bureau investigates Loblawís Ďpricing strategiesíTuesday, November 18, 2014 > 08:30:24
Bureau is probing practices related to pricing strategies and programs
The federal Competition Bureau is investigating the relationship between grocery giant Loblaw Companies Ltd. and a number of its suppliers.
A spokesman for the regulator confirmed in an email Monday 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,” spokesman Greg Scott said.
When the Competition Bureau approved Loblaw’s acquisition of Shoppers Drug Mart 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 spokesman 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.”
Gary Sands, vice-president public policy at the Canadian Federation of Independent Grocers, believes the interest of the Bureau underscores the need for a Code of Conduct for the grocery industry.
“We are not interested in a ‘Loblaw solution’ but an industry solution,” he said. “The current practices in the industry are hurting suppliers, independent grocers and ultimately, consumers.”
Scott said Monday 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. According to an article from The Globe and Mail, suppliers included Danone Inc., S.C. Johnson & Son Ltd. and General Mills Canada Corp, as well as Smucker Foods of Canada Corp., David Chapman’s Ice Cream Ltd., Ferrero Canada Ltd., Con-Agra Foods Canada Inc., Sun-Rype Products Ltd., Sofina Foods Inc. and Reckitt Benckiser Canada Inc.
“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,” Scott said.