Competition Bureau obtains court orders in investigation into Loblaw, Sobeys owners

The Competition Bureau has obtained two court orders requiring the parent companies of Loblaws and Sobeys to hand over information related to its investigation into alleged anticompetitive conduct.

The bureau is investigating the use of property controls in the grocery sector, which are clauses in lease agreements that restrict other potential tenants and their activities.

The bureau said these controls are hampering competition in the grocery sector.

The competition commissioner applied in Federal Court in May to order Empire Cos. Ltd. and George Weston Ltd. to hand over records about real estate holdings, lease agreements, customer data and other records.

The bureau said Tuesday this information will help determine whether Sobeys and Loblaw are imposing anticompetitive restrictions that negatively affect competition in the grocery industry. It said there is no conclusion of wrongdoing at this time.

Spokespeople for Empire and George Weston did not immediately respond to requests for comment.

Empire previously pushed back against the investigation, saying in a separate court application that the probe gives the commissioner “the appearance of a lack of independence.” It denied that property controls are anticompetitive.

In May, the Competition Bureau said it had filed a motion to strike Empire’s application for judicial review.

Spokeswoman Sarah Brown confirmed Tuesday that motion was granted, but said Empire is appealing the decision.

Loblaws’s parent company is co-operating with the bureau’s review, spokeswoman Catherine Thomas said in May on behalf of George Weston Ltd.

“Restrictive covenants are very common in many industries, including retail. They help support property development investments, encouraging opening of new stores and capital risk-taking,” she said in a statement at the time.

The commissioner’s probe is focused on the companies’ operations in Halifax, but also more broadly across the country.

The court documents filed in May describe Empire’s and George Weston’s holdings in real estate investment trusts, or REITs, which count the companies’ own grocery banners as major tenants.

Through a subsidiary, Empire holds a 41.5-per-cent interest in Crombie Real Estate Investment Trust, while George Weston has a controlling ownership interest of 61.7 per cent in Choice Properties Real Estate Investment Trust.

The Competition Bureau revealed its investigation into the use of property controls in the grocery sector in February.

At the time, deputy commissioner Anthony Durocher told a House of Commons committee that property controls could be holding back growth for independent grocery stores and chains, and could also be a barrier for foreign players looking to enter the Canadian market.

Industry Minister François-Philippe Champagne has said he’s looking for a foreign grocery to enter Canada and boost competition.

— With files from Darryl Greer

This report by The Canadian Press was first published June 11, 2024.

Companies in this story: (TSX:L, TSX:EMP.A, TSX:CRR.UN, TSX:CHP.UN, TSX:WN)

Rosa Saba, The Canadian Press