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Canada needs more grocery competition, federal watchdog finds

Most Canadians buy groceries in stores owned by a handful of grocery giants

Canada’s grocery sector needs more competition to help keep food prices down and encourage new entrants, the country’s competition watchdog has found.

In a highly anticipated study released Tuesday, the Competition Bureau said concentration in the grocery industry has increased in recent years with the largest grocers growing the amount they make on food sales.

Most Canadians buy groceries in stores owned by a handful of grocery giants, with Canada’s three largest grocers — Loblaws, Sobeys, and Metro — collectively reporting more than $100 billion in sales and $3.6 billion in profits last year, the study found.

“Canada needs solutions to help bring grocery prices in check,” the study said. “More competition is a key part of the answer.”

The competition watchdog proposes four recommendations to improve competition and lower prices, including an innovation strategy to support new grocery businesses and expand consumer choice.

It also recommends governments encourage the growth of independent grocers and the entry of international grocers into the Canadian market, standardize unit pricing to help Canadians easily compare grocery prices, and limit real estate controls in the grocery industry that make it difficult — or even impossible — for new stores to open.

Meanwhile, the Bureau said it also needs to approach its work in the grocery industry with “heightened vigilance and scrutiny” to ensure Canadians benefit from greater choice and more affordable groceries.

“We need to thoroughly and quickly investigate allegations of wrongdoing, and we need the power to act when issues arise,” the study said.

The competition watchdog committed to taking steps to better promote competition in the Canadian grocery industry, including providing a pro-competitive perspective to support the implementation of Canada’s grocery code of conduct.

It also committed to revisiting the findings of its study in three years to assess the progress on recommendations it has made to government.

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