Competition Bureau reaches deal with Empire to end property control in Alberta town

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GATINEAU, Que. — The Competition Bureau has reached a deal with Empire Co. Ltd. to remove a property control that the regulator says restricted grocery store competition in Crowsnest Pass, Alta.

Empire’s IGA store is the only grocery store in the town, which has about 6,000 residents.

The Competition Bureau says its investigation found a property control restriction that came into force in 2017 protected the IGA from competition and ensured it would continue to be the only grocery store in the area.

Property controls are terms baked into commercial leases that put restrictions on other tenants and their activities, such as what kinds of stores can open nearby or what neighbouring stores can sell.

The Competition Bureau has said these clauses, which are widely used in the retail sector, are hampering competition in grocery.

The bureau says the agreement with Empire means a competitor can move forward with plans to open a second grocery store in Crowsnest Pass.

“Market forces — not property controls — should determine whether and where new grocery stores can open in communities across Canada. The removal of this property control in Crowsnest Pass will allow for more grocery competition to the benefit of its residents,” said competition commissioner Matthew Boswell in a statement.

Empire did not respond to a request for comment.

Empire is the parent company of Sobeys Inc., which operates 1,600 stores across Canada under several banners including Sobeys, Safeway, IGA, FreshCo, Foodland, Longos, Farm Boy, Thrifty Foods, Les Marches Tradition and Marche BoniChoix.

The bureau has been investigating the use of property controls by the parent companies of Loblaws and Sobeys, and said those investigations are ongoing.

Recent amendments to the Competition Act have given the bureau more powers to protect and promote competition.

Gary Sands of the Canadian Federation of Independent Grocers said he’s pleased to see the bureau using its new powers to crack down on the use of property controls, particularly in a small town.

“The issue of property controls is even more of a concern in smaller communities where there (isn’t) access to other grocery stores,” he said.

“It’s not just bad for competition, you’re actually impacting food security.”

In November, Walmart Canada said it would eliminate its use of property controls relating to retail competition across the country.

The announcement came after Loblaw said in October it would eliminate its use of commercial property controls if other grocers did the same, while Empire said it would like to see the government force retailers to stop using property controls.

Sands said he hopes Thursday’s announcement will send a signal to the rest of the industry, and perhaps prompt the major grocers to make some changes without the bureau’s involvement.

“I hope that the bureau’s action today will trigger a reaction from others in the industry to recognize that these restrictive property controls in some cases are unnecessary, are barriers to competition, and in some cases actually impact food security for Canadians.”