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Empire, the parent company of Sobeys’, Farm Boy, Foodland, Safeway, IGA, FreshCo and other store banners, agreed to relax its use of property controls following a probe by Canada’s Competition Bureau, which argues the tactics reduce competition in the grocery industry.
Details were revealed by the Competition Bureau in a release Tuesday.
“The agreement with Empire removes barriers to competition and will support new entry and increased competition from retailers selling everyday essential items,” said the Competition Bureau.
“The Bureau is committed to identifying and addressing barriers that limit competition across the food supply chain so that Canadians see the benefits of competition in the form of lower prices, greater choice and increased innovation.”
The new consent agreement reflects prior commitments by Empire in July to change its use of property controls, and by registering the agreement with the Competition Tribunal, those commitments are now legally binding and enforceable.
Under the terms of the agreement with the Competition Bureau, Empire agreed to “no longer enforce existing restrictive covenants, enter new restrictive covenants, or request that others establish restrictive covenants that benefit Empire.”
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The agreement also states that Empire will “limit its use of exclusivity clauses.”
Property controls, the Bureau explains in the release, are specific legal restrictions that limit how a property can be used by others.
For example, with commercial properties, exclusivity clauses can legally prohibit landlords from leasing space out to another tenant if it competes with an existing tenant. This means an exclusivity clause could potentially limit how many other grocery stores can be on one property.
Another type of property control the Bureau lists is restrictive covenants, which prevent a land owner or purchaser from using property to operate or lease to operators certain types of businesses. This means if someone wants to purchase a commercial space that is available, the restrictive covenant could state that the purchaser can’t use the space for a grocery store.
Since Empire can no longer enforce certain property controls under the agreement, the company must also consider and respond to requests to have existing property controls removed, the Bureau states separately from the release in a backgrounder.
Some of those property restrictions may still appear in existing records, leases or agreements, and any business, property owner or other interested party can request those restrictions be removed by contacting Empire.
This comes as food affordability remains a challenge for millions of Canadians amid the heightened cost of living, with a recent study finding nearly half are putting affordability ahead of nutrition and taste when it comes to buying food.
The Bureau argued in a 2023 study that increasing competition in the grocery industry could help improve food affordability.
This also follows several other investigations into grocery conglomerates, including Loblaw, which since agreed to end its use of property controls in Canada.
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