Canadian PM Justin Trudeau to convene grocers on lowering food prices

Nation’s largest grocery retailers to be tasked with developing near-term action plan.
Justin Trudeau-grocery rebate-local food market visit-July 2023_from Trudeau office
Trudeau visited a local food market in July in support of Canada's "Grocery Rebate" program to provide food price relief. / Photo courtesy of PM Trudeau's office

Canadian Prime Minister Justin Trudeau is turning up the heat on grocery retailers to cool down food price inflation.

Trudeau announced Thursday that he plans to summon the leaders of major grocery chains to “an immediate meeting” in Canada’s capital of Ottawa to discuss potential ways to stabilize food pricing in the near term. The meeting is slated for next week, and attending retailers would have a deadline of Oct. 9 to come up with proposals, Reuters reported.

“We made a commitment to stand up for the middle class, and we will not stop fighting until everyone has a real and fair chance to succeed,” Trudeau said in a statement. “As we head into a new parliamentary session next week, we remain focused on the things that matter most to Canadians: making life more affordable and creating good, middle-class jobs now and into the future.”

In the announcement, Trudeau didn’t name retailers slated to participate, but the PM said after a caucus retreat in London, Ontario, that the meeting would involve the nation’s five largest grocers, including Loblaw Cos., Sobeys/Empire Company Ltd., Metro Inc., Walmart Canada and Costco Wholesale Canada, according to Canada’s Financial Post. The Post reported that the companies would have until Thanksgiving to provide a plan.

“Large grocery chains are making record profits. Those profits should not be made on the backs of people who are struggling to feed their families,” Trudeau said in the Post article, adding, “If their plan doesn’t provide real relief for the middle class and people working hard to join it, then we will take further action, and we are not ruling anything out, including tax measures.”

To address grocery pricing and competition, the Canadian government plans to introduce a first set of legislative amendments to the nation’s Competition Act, Trudeau said in his announcement. Those measures would give the Competition Bureau—Canada’s antitrust watchdog—powers to require the production of information for “effective and complete” market studies as well as empower the bureau to act against collaborations that “stifle competition and consumer choice,” namely in cases where large grocers thwart smaller rivals from setting up nearby operations.

In addition, Trudeau’s administration said the government aims to remove the “efficiencies defense,” in which possibly anticompetitive mergers can survive challenges if corporate synergies offset the harm to competitors, even if consumers end up with less choice and higher prices.

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Published reports said Trudeau's planned meeting next week will include retailers Loblaw, Sobeys, Metro, Walmart and Costco. / Photo: Shutterstock

“Our government is taking concrete actions to stabilize food prices and improve competition in Canada. That’s why the industry needs to step up with meaningful solutions,” stated François-Philippe Champagne, Canada’s minister of innovation, science and industry. “But that’s not all. We also need updated tools to modernize our competition environment. Our government will continue to work day-in and day-out to bring relief to consumers and increase competition.”

The Retail Council of Canada described Trudeau’s requested meeting with grocery retailers as misguided. In a statement on Thursday, the trade association noted that supermarkets and other grocers are only part of the equation that determines food prices.

“Retail Council of Canada and its grocery members understand that Canadians are struggling as they face this exceptional cost-of-living crisis. That’s why grocers continue to do what they can—including very publicly pushing back on suppliers—to stabilize food prices, leading to some of the lowest food price inflation rates in the world,” the trade group said in its remarks.

“Anyone who understands the grocery sector knows why food prices have gone up. Numerous reports over the past year—including those from Statistics Canada, the Bank of Canada and the Canada Food Report 2023—have studied this issue and concluded that grocer prices and profits have nothing to do with it,” the council explained. “Simply put, the price on grocery shelves is driven by increased vendor costs from food manufacturers and producers—itself caused by a host of global factors, including supply chain challenges, the war in Ukraine, fuel prices and climate events.”

Canada’s contentious grocery pricing debate

Public consternation over high food prices has continued to simmer in Canada. In late July, following an in-depth study, the Competition Bureau concluded that market power in the nation’s grocery retail sector is too concentrated and all levels of government must act to foster competition.

The bureau’s “Canada Needs More Grocery Competition” report outlined current competition in the country’s grocery industry and spotlighted barriers to raising competition. Possible solutions cited in the study included supporting the growth of independent grocers, opening doors to international grocery retailers and encouraging emerging business models to bring more competition, innovation and choice to Canadian shoppers.

In part, the study came as grocery retailers in Canada have drawn more public scrutiny amid historically high food inflation. Many Canadian consumers have cast a skeptical eye at grocers, believing that companies were engaged in “greedflation,” or using elevated inflation as a cover to hike prices. In March, the heads of Canada’s big-three grocers—Galen Weston of Loblaw, Michael Medline of Sobeys and Eric La Flèche of Metro—were grilled publicly about potential grocery price gouging in a parliamentary committee hearing.

Canada Needs More Grocery Competition study-Competition Bureau-June2023-grocery giants

Source: Competition Bureau Canada, "Canada Needs More Grocery Competition" report, June 2023.

In June, the Retail Council of Canada released a report determining that Canada’s grocery retail sector hadn’t practiced greedflation, the same week that the government released a report scrutinizing high food prices. The Canadian House of Commons’ Standing Committee on Agriculture and Agri-Food last fall had voted to undertake an extensive study of elevated inflation in the food supply chain, rising grocery prices and possible profiteering by large supermarket chains.

Canadian consumers’ concerns about the affordability of groceries, in turn, led Canada’s government to propose a “Grocery Rebate” to give shoppers relief from climbing food prices. Under the program, the Grocery Rebate would be delivered via a one-time payment, with a total of $2.5 billion in targeted assistance earmarked for 11 million low- and modest-income Canadians and families.

In its statement this week, the Retail Council of Canada noted that any “credible” talks about lowering food pricing should include not just food retailers but also processors, manufacturers and “other relevant businesses within the supply chain.” The group said vendor costs account for over 70% of the end price to customers.

“Rather than casting blame where the experts agree it does not belong, the federal government should look in the mirror. The government could take a number of steps to make food more affordable, including temporarily removing the carbon tax from farmers, food processors and distributors and cancelling government’s planned plastic packaging targets that could increase costs to grocers by $6 billion a year,” the Retail Council of Canada stated. “Grocers are always prepared to have good-faith discussions with government about our industry, challenges with the food supply chain or with affordability for Canadians. But we are not going to take part in discussions that time and time again fail to look below the surface as to the true cause of rising grocery prices.”

Global food retailer Carrefour also is looking to manufacturers to pitch in on bringing down food prices. Published reports said the French company is singling out manufacturers for “shrinkflation,” or lowering shelf prices by reducing a product’s quantity and/or size. To that end, the retailer reportedly is affixing labels saying that a certain product “has seen its volume or weight fall and the effective price by the supplier rise.” Reuters reported that product shrinkflation-tagged by Carrefour include items from companies like Nestle, PepsiCo and Unilever.



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