TORONTO -- The announcement by Loblaw Cos. Ltd. that they have admitted to participating in a scheme to increase packaged bread prices for close to 15 years and at the same time suggesting another major bread producer and other grocery chains were also participants in this scheme, once again underscores the concerns that the Canadian Federation of Independent Grocers (CFIG) has expressed to the Bureau and others in government over the last five years.
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As you know, our concern has been that as a result of increased consolidation both in the retail and supplier sectors, the standard fair competitive practices of the past, have become distorted. CFIG appreciates that as a result of our advocacy to and dialogue with the Bureau on this issue that we have seen a better understanding on the part of the Bureau of the grocery industry and how these distortions in market practices have impacted fair competition. That being said, CFIG wishes to register our dismay and disappointment with the agreement between the Bureau and the Loblaw Cos. Ltd., that in exchange for immunity from further action and penalties, Loblaw will simply offer a mea culpa and provide gift cards for customers.
This was a prolonged and sustained scheme to control prices. We have still to see how the gift card component will be rolled out, but we would hope that this measure will not involve people having to sign up to the PC loyalty points program, so that in no way can this price fixing scheme be distorted into using it to gain a competitive advantage in the marketplace.
CFIG believes that this immunity agreement has sent the wrong signal to the industry. To our members, this strikes at the heart of the credibility of the Bureau and its role. The penalties for price fixing become meaningless–no matter how long the scheme has been in place, nor the impact it has had on the ability of our members to compete fairly with respect to pricing on such an important commodity such as bread.
It is our view that the Bureau should have imposed a financial penalty on Loblaw Cos. Ltd. The proceeds of which could have perhaps be used to allow independent retail grocers to provide gift cards to their customers, who as we now know, paid higher prices for bread than they should have by shopping at an independent retail grocery store.
Lastly, while we understand the role of the Competition Bureau is to enforce the current Act, this issue once again underscores our view that a Code of Conduct for the grocery industry—applying to both retailers and suppliers alike, is necessary to restore fairness to the grocery industry. This is why other jurisdictions, such as Australia and the UK, have developed similar Codes of Conduct for their grocery industry.
We hope that within government, including the Bureau, there will be support for industry and government to come together and work to develop such a Code. Seeing the Bureau refer to a cartel in the food industry, only demonstrates that this is not a Loblaw issue, but an industry issue. Everyone benefits from a healthy, fair, robust competitive landscape.
If all of the stakeholders in this industry truly believe, as Galen G. Weston stated, that "This sort of behaviour is wrong and has no place in our business or Canada's grocery industry", then simply enshrining the principles of fair competition in a Code of Conduct should be welcomed by all.
We hope as always, our comments will be considered and we look forward to continued discussions with the Bureau and government on this issue in the year ahead.
SOURCE Canadian Federation of Independent Grocers
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