e-4244 (Business and trade)

The high grocery prices that have put pressure on Canadian consumers and families over the past two years have been top of mind for the Government. While the current inflationary period has global root causes – including war, weather events, and the effects of the COVID-19 pandemic on consumption habits and shipping capacity – Canada’s grocery sector is relatively concentrated, which means that we must remaining vigilant and ready to respond to any threats to competition. The Government has been proactive in this regard by maintaining a sustained focus on improving our country’s competition law and enforcement framework.

Budget 2021 significantly increased funding for the Competition Bureau, providing $96 million over five years, and $27.5 million ongoing, to enhance its capacity and ensure it is equipped with the necessary digital tools for today’s economy.

Through Budget 2022, the Government bolstered the Competition Act through a series of amendments to fill gaps and better align Canada with our international partners. Notably, in the wake of concerns over potential wage-fixing coordination in the grocery industry during the early stages of the pandemic, the Act was amended to ensure that agreements between different employers to collude on wages or conditions of work, thus harming competition for labour, were treated the same way that harmful price-fixing agreements were.

Other amendments updated maximum penalties to make them proportionate to the benefit derived from anti-competitive or deceptive conduct, ensuring sure that penalties are meaningful and not simply the cost of doing business. The consumer-unfriendly practice of drip pricing, that is hiding mandatory fees to make it harder to do accurate comparison shopping, was clarified as a deceptive practice. Numerous other targeted, but important, updates were made to the law for shorter-term improvement.

In May 2022, the Minister of Innovation, Science and Industry wrote to the Commissioner of Competition to encourage him to do everything in his power to ensure grocery stores are not profiteering during a time of rising prices. A few months later, the Bureau launched a market study to evaluate the extent to which higher grocery prices are driven by changing competitive dynamics, what can be learned from steps that other countries have taken to increase competition in the sector, and what can be done to lower barriers to entry and expansion to stimulate competition for consumers. The Bureau is expected to issue a report on its findings in June 2023.

Finally, last November, the Government launched comprehensive public consultations on how the Competition Act should be modernized to best serve Canadians in the evolving economic landscape. The consultation builds on recent amendments to the law, and is designed to consider broader, open-ended questions, including whether Canada has the right legal tests in place to prevent clearly harmful conduct and mergers; whether the Competition Bureau has the authority it needs to identify threats to competition and take timely and effective action; whether new or stronger tools are needed to promote compliance with the Act; and much more. All of this is in an effort to make sure that our marketplaces, including in the ever-important food sector, operate in ways that best serve Canadians.