Competition Bureau obtains court orders to investigate owners of Loblaw and Sobeys

The Competition Bureau obtained two court orders ordering the parent companies of Loblaws LT and Sobeys to provide information related to an investigation into alleged anti-competitive conduct.

The office is investigating the use of property controls in the food sector, i.e. clauses in lease agreements that limit other potential tenants and their activities.

The office found that these controls hamper competition in the food sector.

In May, the Competition Commissioner filed an application in the Federal Court to order Empire Cos. Ltd. EMP-AT and George Weston Ltd. WN-T transferring documentation regarding owned properties, lease agreements, customer data and other records.

The bureau said Tuesday that the information will help determine whether Sobeys and Loblaw impose anticompetitive restrictions that negatively affect competition in the grocery industry. It was stated that at the moment there are no conclusions regarding irregularities.

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

Empire has previously opposed the investigation, arguing in a separate court filing that the investigation gives the commissioner an “appearance of lack of independence.” He denied that ownership control was anti-competitive. In May, the Competition Bureau said it had filed a motion to dismiss Empire’s application for judicial review.

Parent company Loblaws is cooperating with the office’s review, spokeswoman Catherine Thomas said on behalf of George Weston Ltd. in May.

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

The commissioner’s investigation focuses on the companies’ operations in Halifax, but also more broadly across the country.

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

Through a subsidiary, Empire holds a 41.5% interest in Crombie Real Estate Investment Trust CCR-UN-T, while George Weston holds a controlling interest of 61.7% in Choice Properties Real Estate Investment Trust CHP-UN-T.

The Competition Bureau revealed its investigation into the use of ownership controls in the food sector in February.

Deputy Commissioner Anthony Durocher told a House of Commons committee at the time that real estate controls could hamper the growth of independent stores and grocery chains and could also act as a barrier to foreign players wanting to enter the Canadian market.

Industry Minister Francois-Philippe Champagne said he is looking for a foreign grocer to enter Canada and increase competition.

With the Darryl Greer files.