Canada investigates grocers over charges of price gouging
With inflation driving grocery prices sky-high over the last year, the Canadian government is stepping in to determine whether or not grocers have been gouging.
In response to growing public perception that Canada’s major supermarkets have taken advantage of the inflationary economy, the nation’s federal competition watchdog is undertaking a study of grocery chains to determine if they may have played a role in price spikes, according to Yahoo! News.
The bureau is particularly interested in whether anti-competitive practices played a role in increased prices and will be studying the vertical until June, 2023. Canada is also conducting a parliamentary inquiry into its top three grocers — Loblaws, Sobeys and Metro — which have seen increased profits during this inflationary period.
Public sentiment in Canada has been turning against the major grocers for a number of months. In August, Canadian celebrity money expert Gal Vaz-Oxlade sent out a tweet calling for a boycott of Loblaws, accusing the grocer of profiteering.
In response to criticism, Loblaws announced earlier in October that it would be freezing the price of more than 1,500 of its products sold under its private label brand, No Name, according to a press release. The price freeze will remain in place through January of 2023.
A day after Loblaws’ announcement, Metro announced that it would refrain from raising private label or national brand prices between November and February, according to CP24 News.
Sobeys has publicly decried the accusations of profiteering, a Financial Post article reported. Michael Medine, CEO of Empire Co. LTD, which owns Sobeys and other grocers, called criticisms “reckless” and “incendiary” and referred to critics as “armchair quarterbacks.”
At the time this article was written, Sobeys had not announced a pricing freeze.
Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, told Bloomberg (before the Metro announcement) that customers would be watching the major chains to see who followed Loblaws’ lead.
The inflationary environment has led to tension, not just between customers and grocers, but between grocers and suppliers. Early in 2022, Frito-Lay stopped shipping product to Loblaws stores over an apparent pricing dispute.
- Competition watchdog to probe grocery sector amid rising food prices – Yahoo! Finance
- Are grocers profiteering from inflation? – RetailWire
- Loblaw hits the brakes on food inflation by freezing prices on 1,500 no name products – Loblaw Companies Limited
- Metro says its holding prices steady as usual this winter in wake of Loblaw campaign – CP24 News
- Sobeys boss says he’s fed up with ‘reckless and incendiary’ criticisms about grocery profits amid inflation – Financial Post
- Frito-Lay stops deliveries to Loblaw in price dispute – RetailWire
DISCUSSION QUESTIONS: Do you think U.S. grocers will come under pressure similar to what is taking place in Canada should food inflation continue to rise? How should grocers answer questions about profiteering activity in the current environment?