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Canada’s Competition Bureau Investigates Grocery Retailers

Canada's Competition Bureau has launched an investigation into the country’s largest grocery retailers, including Loblaws (L) and Sobeys’ parent Empire Company Ltd (EMP.A).

The competition regulator says it is probing alleged anticompetitive conduct on the part of grocery store chains across Canada.

The Competition Bureau is probing whether the country’s large grocers use of property controls limits retail grocery competition in communities large and small.

Specifically, the regulator is investigating whether the grocery chains have lease agreements on their stores that are designed to restrict other potential tenants, thus hurting competition.

Earlier this year, the federal government in Ottawa said that it is considering allowing foreign grocery store chains into the Canadian market to strengthen competition.

Canada’s grocery store owners have come under public and political pressure as food prices have risen by double digits over the last few years and been a major contributor to inflation.

The grocers have denied allegations of price gouging but Ottawa has called on them to stabilize food prices. A national boycott of Loblaws stores has been organized among consumers.

The major Canadian grocers have also agreed to participate in an industry-led code of conduct meant to level the playing field for suppliers and independent grocery retailers.

The stock of Loblaws has risen 30% in the last 12 months to trade at $156.25 per share. Empire Company’s stock has declined 4% over the past year and trades at $34.19 a share.