Final Hurdle Cleared for Canada’s Grocery Code of Conduct
All the major Canadian grocers are now on board for a grocery code of conduct, paving the way for industry guidelines that have been several years in the making.
The federal, provincial, and territorial agriculture ministers made the announcement on July 18 during their annual meeting in Whitehorse, stating that the remaining holdouts Walmart and Costco have now agreed to sign on to the code.
“This is a positive step toward bringing more fairness, transparency, and predictability to Canada’s grocery supply chain and for consumers,” the ministers said in a statement.
Confirming the support of the five major retailers—Loblaw, Walmart, Costco, Metro, and Sobeys owner Empire—is an “important milestone,” said Michael Graydon, CEO of the Food, Health & Consumer Products of Canada association and chairman of the interim board for the code.
“It was critical that all of the retailers got involved because it’s a very competitive business,” he said.
“It kind of was an all or none situation. And I think they all respected that and came to the table.”
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The voluntary grocery code is meant to level the playing field for suppliers and smaller retailers by providing guidelines for fair negotiations.
Progress on the code appeared to be in jeopardy last fall as it neared completion, with some major retailers saying they weren’t ready to sign on. Leaders from Loblaw and Walmart Canada told MPs at a House of Commons committee meeting that they were concerned the code would lead to higher retail prices.
As a result, calls to make the code mandatory grew, with the House of Commons committee studying food prices telling Loblaw and Walmart in February that if they wouldn’t sign on, it would recommend the code be made law—an option that the federal agriculture minister said he was exploring.
In May, Loblaw said it would agree to the code as long as other industry players would do the same, saying its concerns had been alleviated by changes to the document.
“The code now is fair, and it will not lead to higher prices,” said president and CEO Per Bank at the time.
After Loblaw’s announcement, attention turned to Walmart Canada and Costco—but the two retailers have now agreed to support the code.
Canada’s five biggest grocers have been under intense public and political pressure as the price of groceries has risen by more than 22 percent over four years, with accusations of profiteering and some consumers launching a boycott of Loblaw earlier this year.
The grocers have defended themselves against the accusations, telling MPs that their companies are not responsible for higher food prices.
“The truth is we are at the end of a very long food supply chain that has economic inputs at every step and stage,” Empire president and CEO Michael Medline told the committee in March 2023.
More recently, Bank and Loblaw chairman Galen Weston pushed back on what they called “misguided criticism” of the grocer as calls for a boycott gained steam online.
Grocery companies have also been expanding their discount footprints to meet growing consumer demand for lower prices, and those stores have been major drivers of sales growth.
Amid the pressure on grocers to stabilize prices and agree to the grocery code, the Competition Bureau has also launched investigations into the parent companies of Loblaws and Sobeys for alleged anticompetitive behavior.
The bureau is looking into the use of property controls in the sector, clauses in commercial leases designed to restrict other potential tenants and their activities. It argues that such clauses limit competition not only for smaller Canadian grocers but for potential foreign entrants to the sector as well.
Industry Minister Francois-Philippe Champagne has said he’s seeking a foreign grocer to come to Canada and help strengthen competition.
