It was evident to the federal government as early as last fall that Loblaw and Walmart might be holdouts to the grocery code of conduct, jeopardizing the project's success. 

Documents obtained through access to information legislation shed new light on the federal government’s efforts to convince the two retailers to sign the grocery code of conduct, with cracks appearing in the months leading up to a House of Commons meeting where the grocers said they couldn't sign the near-complete code.

“There are ongoing federal efforts to seek commitment from key players, including large retailers like Walmart and Loblaws, to participate in the code,” read a briefing note prepared on Sept. 22 for a meeting between federal agriculture and agri-food minister Lawrence MacAulay and Quebec agriculture and food minister AndrĂ© Lamontagne. 

The document, obtained through the Access to Information Act, says participation by some of the largest retailers — namely Loblaw and Walmart — is “still to be determined.”

The code of conduct is intended to set out agreed-upon rules for negotiations between industry players, including retailers and suppliers. It would also include a dispute resolution process. 

It was meant to be voluntary, but it's always been acknowledged that it needs all the major players on board to work, said Francis Chechile, a spokesman for MacAulay, in a statement. 

Until last fall, the code appeared to be progressing well, said Chechile, noting that federal, provincial and territorial governments had been closely monitoring progress and engaging with stakeholders including Loblaw and Walmart. 

“By late October, it had become evident that the hesitation from Loblaw and Walmart was such that it posed a risk to the successful implementation of a code with full industry participation," said Chechile. 

On Dec. 7, leaders from Loblaw and Walmart told the House of Commons committee studying food prices that they couldn’t commit to signing the code in its current form, citing concerns it would raise prices. 

At the meeting, Loblaw chairman Galen Weston said he stood by a letter the company had sent a month earlier to the committee developing the code. The letter said that Loblaw was worried the code could “raise food prices for Canadians by more than $1 billion." 

The Dec. 7 committee meeting served as public confirmation of the two grocers' unwillingness to sign on to the code as drafted, said Michael Graydon, CEO of the Food, Health and Consumer Products of Canada association and leader of the group that's been developing the code. However, he also said there were indications for him around October that this might happen. 

As the code neared completion, plans were underway to launch a grocery code adjudicator office.

But after the Dec. 7 comments by Loblaw and Walmart, progress on the office stalled. Work to hire an adjudicator is on hold, and a funding request for the office is in limbo, said Graydon. 

However, even before indications of the two grocers' reticence became apparent to Graydon and the federal government in October, officials were working to get the retailers on board, the documents show.

Deputy minister of agriculture Stefanie Beck, two representatives from Loblaw and three other government officials met on Sept. 22 to discuss several issues, primarily sustainable agriculture, according to a briefing note. 

But they also planned to talk about the code. The briefing note said government officials should “underscore the federal desire that all large retailers commit to the grocery code of conduct.” 

“Loblaws has not taken an active role in the industry-led process to develop a grocery code of conduct and they have been reluctant to publicly confirm support for the code until the industry proposal is finalized,” the note reads. 

The federal, provincial and territorial ministers had a call on Nov. 27 to discuss the code and the possibility that the two major retailers might not adopt it, according to a briefing note.

Though the code is meant to be voluntary, recently there have been talks of making it law instead to force everyone to participate. 

MacAulay has said that the government is “actively examining all federal options,” including legislation. 

And in a letter mid-February, the House of Commons committee urged Loblaw and Walmart to sign on, saying if they didn’t, it would “not hesitate to recommend that the federal and provincial governments adopt legislation to make it mandatory.” 

Graydon is still hopeful. 

“I don't think it's dead in the water; I think there is some really strong desire to try to find a solution,” he said. 

The group is looking at whether some of the language of the code could be changed to bring more clarity, or more prescriptiveness, said Graydon — “and there seems to be openness, at least from one of the retailers, to have those conversations.” 

Conversations with Loblaw have given the committee a chance to explain aspects of the code and see whether a solution can be reached, he said. 

“My sense is they're legitimate in their approach to try to find a solution.”

Loblaw spokeswoman Catherine Thomas said in an email the company is an “active participant in the ongoing industry process” and is optimistic a code can be finalized that everyone can support. 

Walmart Canada spokeswoman Sarah Kennedy directed The Canadian Press to previous public statements about the code by the retailer, including one from October in which the company said it’s “conscious of adding unnecessary burdens that could increase the cost of food for Canadians.”

A more recent statement from mid-February states that Walmart supports initiatives promoting fairness and reciprocity, and benefiting consumers. 

“While we have significant concerns about the code in its current form, we will continue to work constructively with the industry on this topic.”

Proponents of the code have pushed back on claims that it could lead to higher retail prices. 

The documents also show that the industry steering committee requested around $1.8 million in government funding to support the implementation of the not-for-profit grocery code adjudicator office.

A memo to the deputy agriculture minister digitally signed on June 6, 2023 describes the request for a non-repayable contribution from federal, territorial and provincial governments to support the office for its first two years, “until its revenue model is implemented and becomes self-sufficient.” 

“The majority of funding is going to come from large retailers and large manufacturers,” said Graydon, though the group has planned for scenarios in which not all major players sign on right away. 

“Hopefully, it's the opposite, everybody's in, everybody's early, we get the funding that we require, and we can reduce the requirements in regards to any sort of contribution from government,” he said.

Chechile confirmed that “officials are awaiting the outcome of industry discussions before taking further steps” related to the funding request. 

With files from researcher Ken Rubin in Ottawa

This report by The Canadian Press was first published April 26, 2024.