Since Walmart Canada has announced its decision to remove property controls in relation to retail competition nationwide, it marks a significant shift in the grocery industry landscape. This move comes at a time when Canada’s competition watchdog is investigating the use of restrictive real estate covenants, with major grocers signaling their openness to eliminating them. The industry’s use of these property controls, embedded in commercial leases to restrict other tenants and activities, has drawn recent attention and scrutiny.
Here are some key points to consider regarding the removal of property controls:
- Walmart’s Decision:
- Walmart has unilaterally waived all competitive retail restrictions and is informing its landlords and landowners of this change.
- This decision is a proactive step that aligns with the Competition Bureau’s investigation into property controls used by Loblaw and Sobeys’ parent companies, which are believed to hinder competition in the grocery sector.
- Implications of Property Controls:
- Besides the grocery industry, property controls are prevalent in various sectors to dictate business operations and limit competition.
- These controls could prevent new grocery stores from entering a shopping plaza or restrict specific items from being sold by retailers.
- Additionally, property controls may limit the types of businesses that can occupy a store location following a company’s departure.
- Industry Response:
- Loblaw had previously committed to discontinuing its use of commercial property controls if other grocers followed suit.
- Sobeys’ owner, Empire, expressed support for eliminating these clauses across the retail sector.
- Walmart’s decision to remove property controls has been welcomed by Loblaw, encouraging other grocers to consider a similar approach. Empire’s stance on this matter remains unchanged.
- Regulatory Changes:
- Recent amendments to the Competition Act have granted the Competition Bureau enhanced authority to safeguard and enhance competition in the market.
- These amendments enable the bureau to address agreements between parties that impede competition, even if they are not direct competitors.
- This regulatory shift aims to address barriers faced by independent and foreign grocery stores seeking to establish a presence in Canada.
In conclusion, the elimination of property controls in the grocery industry signifies a step towards fostering a more competitive market landscape. With ongoing regulatory developments and industry players aligning to promote fair competition, the future of retail in Canada looks promising. As stakeholders navigate these changes, collaboration and adherence to new regulations will be essential for a thriving and diverse retail sector in the country.
