Canada’s Competition Bureau says it is launching a study on competition in the food industry.
The agency said in a statement on Monday that it plans to investigate various issues in the food industry, “with the aim of recommending measures that governments can take to help improve competition in the sector”.
The bureau functions as perhaps Canada’s preeminent consumer watchdog group investigating anti-competitive practices that serve to raise prices for consumers, including things like deceptive marketing, price-fixing and even outright fraud.
The bureau says the move is not a reaction to any specific claims of shortages, but comes as consumers struggle with food prices rising at their fastest pace in more than 40 years.
Last week, new data showed that while Canada’s inflation rate fell to 6.9 percent, the price of food purchased in stores still rose by more than 11 percent. Food prices have been rising at a faster pace than overall inflation for 10 months in a row.
Many factors have been blamed for the rapid escalation of food prices, including extreme weather, higher input costs and temporary supply chain stresses such as the current invasion of Ukraine. But the bureau says it wants to try to figure out if there are any anti-competitive factors at play, so it’s looking for answers to three broad questions:
- To what extent are higher food prices the result of a change in the dynamics of competition?
- What can we learn from the steps other countries have taken to increase competition in the sector?
- How can governments lower barriers to entry and expansion to stimulate competition for consumers?
The bureau says the relationship between retail chains and their suppliers will not be included in the study, something Professor Mike von Massow of the University of Guelph says is a missed opportunity.
“The Competition Bureau is there to look at competitive behavior, and to me that’s one where there’s a lot more indication and clear evidence that there’s been some anti-competitive behavior,” he said in an interview with CBC News.
“I think they’re missing the point by not looking at the supplier relationship.”
The Bureau is seeking public input on this matter. Anyone interested in contributing is encouraged to contact the bureau through its website before December 16.
Once the investigation is complete, the bureau says it plans to release its findings, along with a list of recommendations for how to fix the problems it finds, if any. That report is expected next June.
The relatively short timeframe is likely a factor in why the bureau is seemingly limited in how broad and deep the investigation should take, von Massow said.
“Narrowing the scope of the study could increase the likelihood that it will be completed on time,” he said.
A previous investigation by the bureau into the movement of food prices showed that some companies conspired for years to fix the price of bread and pastries, at the expense of consumers. That investigation is ongoing.
Major grocery retailers have recently faced enormous pressure on this issue, due to the perception that they are raising prices more than necessary under the guise of high inflation. Loblaw recently announced it would freeze prices on more than 1,500 products under its No Name brand until the end of January as a way to appease consumers.
However, the move has only added to scrutiny of the industry, with many observers saying it is common for grocery chains to demand price freezes from their suppliers each year during the busy year-end holiday season.
“It is industry practice to freeze prices from Nov. 1 to Feb. 5 on all private label and national brand foods and that will continue to be the case this year across all Metro banners,” a spokesperson for Montreal grocery chain Metro told CBC News this year. Sunday.
Issues of supply and demand
The Canadian Federation of Independent Retailers, which represents more than 6,000 independently owned and operated grocery stores across Canada, supports the investigation, spokesman Gary Sands said in an interview.
Unlike large chains, smaller grocery stores are often at the mercy of large suppliers, which in some cases are controlled by major chains.
“Their market power — both at the retail and supplier levels — has sometimes put independent retailers at a disadvantage, particularly in relation to supply issues,” he said.
“People need to understand … the challenges for independent grocers around that kind of consolidation.”
Major grocery chains, for their part, also say they welcome the bureau’s efforts to investigate all aspects of the industry.
The Retail Council of Canada, which speaks on behalf of Canada’s major grocery chains, told CBC News in a statement Monday that price increases in the grocery aisle “come from manufacturers and processors and are not unique to Canada or the grocery aisle.”
“The rising cost of essentials is a real problem for Canadians, and we strongly believe they would benefit from authentically sought answers on how to deal with inflation, rather than repeating the bogus claims of opportunists,” said spokeswoman Michelle Vasilishen.
“Canadians are facing price increases due to a variety of rising supply chain costs, particularly those caused by the invasion of Ukraine and climate events.”