Competition Bureau investigates grocery pricing policies for limiting advertised deals

GATINEAU — Canada’s competition watchdog is investigating whether grocery pricing policies are preventing retailers from advertising their lowest prices and limiting consumers’ access to deals.

The Competition Bureau said Monday it has launched an investigation into the use of minimum advertised pricing policies in the grocery sector.

Those policies can be imposed by suppliers or negotiated between suppliers and retailers, and set the lowest price at which a retailer is allowed to advertise a product.

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“Canadians expect grocery stores to be able to advertise their best deals,” said Jeanne Pratt, interim commissioner of competition, in a statement. “We’re concerned that policies that prevent this make it harder for grocers to compete, and for consumers to access lower prices.”

Pratt said the investigation is happening at a time when food affordability remains an important concern for Canadians.

The bureau says the practice can make it more difficult for retailers, including discount grocers, to compete on price in a sector dominated by a small number of large companies.

It is examining whether the policies are making it harder for Canadians to find deals, reducing price competition, creating barriers for discount and new grocery retailers, and making it easier for grocers to coordinate prices.

The bureau says minimum advertised pricing policies can prevent retailers from promoting lower prices even if those prices are available in stores.

It also says some retailers may decide to eliminate in-store discounts if they are unable to advertise them.

The agency is asking consumers, retailers, suppliers and others with experience with the policies to provide information about how they affect grocery pricing. A call for information was published Monday.

The information will support the investigation and a broader examination of competition throughout Canada’s food supply chain.

Launched in June, the agency’s food supply chain investigation aims to understand whether more competition in Canada’s food supply chain could keep food prices in check.

It is looking for potential competition issues in three key areas: production and processing; transportation and distribution; and retail pricing practices, including loyalty programs, pricing algorithms, shrinkflation and skimpflation.

The bureau plans to publish a report summarizing its findings and recommendations to policymakers.

In 2023, the Competition Bureau conducted a study on Canada’s retail grocery market, sharing recommendations to improve competition in a report.

Among the recommendations was for provincial and territorial governments to consider introducing accessible and harmonized unit pricing requirements.

The bureau has previously found that greater competition in the retail grocery sector could help lower prices while increasing consumer choice and innovation.

The Competition Bureau is an independent federal law enforcement agency responsible for protecting and promoting competition in Canadian markets.

With files from play 103.7 and Canadian Grocer