Loblaw has not abused its dominant position, says the competition Bureau

Photo: Aaron Vincent Elkaim The canadian Press
The civil investigative sought to determine if Loblaw had influenced the negotiations of its suppliers with their other clients seeking to obtain compensation when other retailers were selling their products at lower prices.

After investigating for three and a half years with Loblaw about allegations of abuse of a dominant position, the competition Bureau of Canada has concluded that no further action was warranted against the largest supermarket chain in the country.

 

The federal agency, which has studied the impact on competition of policies imposed by Loblaw with its suppliers, has determined that there was not enough evidence to conclude that Loblaw had abused its dominant position. The civil investigative sought to determine if Loblaw had influenced the negotiations of its suppliers with their other clients seeking to obtain compensation when other retailers were selling their products at lower prices. The Bureau’s investigation began in march 2014, shortly after Loblaw had made the acquisition of Shoppers Drug Mart, which was at that time the largest chain of pharmacies in Canada.

 

“The Bureau has collected the facts allowing him to develop a thorough understanding of the complex issues in the grocery industry, and we have met our commitment to conduct a comprehensive review “, said in a press release the commissioner of competition, John Pecman. “The line between negotiating tight and competitive behaviour is thin, and companies must be sure not to cross it. The position statement that we have published today on the subject of the civil investigative provides guidance for the grocery sector to continue to respect the canadian competition act. “

 

The competition Bureau has stated that its civil investigative wore on nine policies that have been abandoned by Loblaw in January 2016. He added that he would not hesitate to intervene if additional information were brought to his attention.

 

The companies of the canadian industry from the grocery store often impose various fees to their suppliers. These last pay including listing fees for their products to be kept in stock. Earlier in November, Loblaw announced that its largest suppliers are expected to pay the new costs of handling. Providers using the Loblaw’s distribution centres, will have to pay 0.79% of the price of the products they sell to the company, while those who deliver directly to the stores will pay a fee of 0.24 %. Previously, the company had indicated to its suppliers, in July 2016, a maximum deduction of price automatic of 1.45 percent would be applied on all deliveries. The company had also indicated that it would reject all future cost increases from suppliers, unless they are related to an increase in the cost of inputs.

 

Loblaw and several other grocers focus since a few months on cost-cutting measures to adjust to increases in the minimum wage in some provinces, as well as the pressure due to the competition of retailers to lower prices and to the acquisition of Whole Foods by Amazon.

 

In addition, the competition Bureau is conducting another investigation on an alleged price-fixing of bread at large retailers, including Loblaw, Sobey’s, Metro and others. The retailers have indicated that they collaborated with the Bureau in its investigation.

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