'A step forward': Federal, provincial governments to investigate grocery store fees on suppliers
'PRODUCERS'[PACKING PLANTS, FEEDLOTS]
VS
'DISTRIBUTERS' [LOBLAWS, EMPIRE, ETC]
NEITHER ARE FARMERS, BIG OR SMALL
NEITHER ARE FARMERS, BIG OR SMALL
Financial Post Staff 1 day ago
Canada’s federal, provincial and territorial agriculture ministers on Friday agreed to launch an investigation to find ways to mend tattered relationships between food producers and supermarkets.
© Provided by Financial Post
During the last day of their annual conference, the agriculture ministers agreed to set up a working group to look at the controversial fees that some of the largest grocery chains have started charging suppliers during the pandemic.
“We all recognize that these fees, recently imposed by some retailers, are really worrying,” federal Agriculture Minister Marie-Claude Bibeau said at a press conference. “We want to study the problem.”
Bibeau said the working group will “circumscribe the issue, consult experts and industry, and identify actions that can be taken, both at the federal and provincial level,” with a report on recommendations delivered by July 2021.
The decision to start looking into the issue comes amid renewed calls for government intervention to rein in what food producers say are bully tactics from the most powerful players in the consolidated grocery business. Manufacturing industry groups and independent grocers have called for the government to implement a code of conduct, similar to a model used in the United Kingdom.
“We all recognize that these fees, recently imposed by some retailers, are really worrying,” federal Agriculture Minister Marie-Claude Bibeau said at a press conference. “We want to study the problem.”
Bibeau said the working group will “circumscribe the issue, consult experts and industry, and identify actions that can be taken, both at the federal and provincial level,” with a report on recommendations delivered by July 2021.
The decision to start looking into the issue comes amid renewed calls for government intervention to rein in what food producers say are bully tactics from the most powerful players in the consolidated grocery business. Manufacturing industry groups and independent grocers have called for the government to implement a code of conduct, similar to a model used in the United Kingdom.
“I’m delighted. I think it’s a step forward,” said Michael Graydon, chief executive of Food, Health and Consumer Products of Canada, the major trade association for manufacturers, which has been among the loudest critics of supermarket fees and fines.
This summer, Walmart Canada reignited debate over a code of conduct when it started charging its suppliers, as a way to help cover multi-billion-dollar upgrades to its stores and e-commerce operations. Canada’s biggest grocer, Loblaw Cos. Ltd., followed suit last month with a fee to help cover its own upgrades, and a buying group that includes Metro Inc. has asked for similar treatment.
One of the country’s biggest dairy processors is pushing back against the supermarkets. Lactalis Canada Inc., which includes the Beatrice milk, Astro yogurt and Black Diamond cheese brands, told retailers last week that it will no longer pay fines if shipments come up short in the next month, pointing to production challenges caused by the recent spike in COVID-19 cases.
“What is happening today isn’t conducive to having a strong ag sector,” André Lamontagne, Quebec’s Minister of Agriculture, Fisheries and Food, said in an interview. He will co-chair the working group with Bibeau.
“We want to make sure that those smaller enterprises can remain healthy,” he added.
Graydon said it was “ideal” that the working group would be led by a federal and a provincial minister.
The federal government has determined that regulating terms of sale between supermarkets and suppliers is outside its jurisdiction, but has encouraged the provinces to address the issue.
But advocates have warned that any effective response from the provinces would have to be in lockstep, since the food supply chain stretches across the country.
“If there is anything significant to take place, it will require federal-provincial co-operation,” Graydon said. “We should be in good shape.”
The Retail Council of Canada (RCC), the trade group that represents supermarket chains, was unable to comment before press time Friday night.
“RCC cannot comment until we’ve had the opportunity to review the outcome of the meeting in question,” spokesperson Michelle Wasylyshen said in an email.
The fees aren’t the only reason supermarkets have come under scrutiny lately.
At least one member of Parliament has been calling for the Competition Bureau to investigate the big grocers over their decisions to cut pandemic pay bonuses for their staff on the same day.
On Friday, the bureau released a statement clarifying its position on wage fixing and other “buy-side agreements” — meaning agreements between competitors that drive down the cost on the inputs that businesses buy, such as labour, rather than what they sell.
The bureau felt compelled to put out the statement on Friday in light of “recent public concerns in Canada about potential agreements between employers related to wages,” spokesperson Marcus Callaghan said in an email.
The bureau has seen increased interest in the issue from the legal and business communities and wanted to provide “clarity and transparency,” Callaghan said.
The guidance came two days after bureau commissioner Matthew Boswell broke his silence on the grocery chains’ removal of pandemic pay.
COLLUSION NO DIFFERENT THAN PRICE FIXING
In an address to a conference of independent grocers on Wednesday, he voiced concern that top executives at rival grocery chains had held discussions before cutting the pay.
Metro chief executive Eric La Flèche testified at a House of Commons hearing this summer that he placed several calls to competitors in May and June to ask if they were planning to cut the $2-per-hour wage increase.
At the same hearing, Loblaw president Sarah Davis said she had sent a “courtesy email” to competitors about her decision to cut the bonus on June 13, the same day as Metro and Sobeys’ parent company Empire Co. Ltd. All of the companies have strongly denied any wrongdoing.
Empire chief executive Michael Medline said he insisted on having legal counsel on the call with La Flèche and refused to answer the question on pandemic pay. Empire has started paying bonuses again, based on hours worked, for staff working regions now under lockdown orders, including Manitoba, Toronto and neighbouring Peel Region.
For example, the bonus will total $100 per week for staff in Manitoba who work 40 hours, according to a statement from the United Food and Commercial Workers Union. The union said most members can expect between $25 and $75 per week in bonuses.
The Competition Bureau on Friday confirmed that buy-side agreements, including wage fixing, cannot be pursued as criminal offences under the Competition Act. They can be pursued civilly, though such cases require the bureau to prove that the behaviour prevented competition, which, as the bureau noted on Friday, is “not a low threshold.”
Antitrust experts have said they do not expect the bureau will launch an investigation into the grocers. The bureau has declined to say whether it is investigating or not because it is “required by law to conduct its work confidentially.”
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