Full Breakdown
Empire Co. Ltd. Signs Binding Deal to End Grocery Property Controls
By Drooid · · How we work
Core Event
Empire Co. Ltd., the parent of Sobeys and other Canadian grocery banners, has entered a consent agreement with Canada’s Competition Bureau that obligates the company to cease enforcing existing restrictive covenants and to refrain from creating new ones. The agreement, registered with the Competition Tribunal, also requires Empire to limit its use of exclusivity clauses that prevent landlords from leasing space to competing retailers. The commitments are legally binding and enforceable.
Background & Context
The Competition Bureau began probing the use of property controls by major grocery chains in 2024 after a sector report highlighted these practices as a means of limiting competition in local markets. Property controls—restrictive covenants and exclusivity clauses—can bar new grocery stores from opening on a site previously occupied by an existing tenant or prevent landlords from leasing to competitors. Earlier investigations have targeted other large retailers, including Loblaw Companies Ltd. and Walmart Canada, which have also pledged to eliminate such restrictions. Empire announced its intention to change its practices in July, shortly after the Bureau expanded its probe through a Federal Court order that granted access to nationwide records and testimony.
Timeline
- 2024 – Competition Bureau launches a national investigation into grocery property controls.
- July 2024 – Empire publicly commits to stop using restrictive covenants and exclusivity clauses.
- September 2024 – Empire and the Competition Bureau finalize the consent agreement, making the commitments enforceable through the Competition Tribunal.
- June 26, 2023 – A Sobeys store in west-end Toronto is photographed, illustrating the chain’s presence in the market.
Official Statements & Responses
Jeanne Pratt, Canada’s interim commissioner of competition, explained that the agreement is designed to remove obstacles for new entrants and to foster greater retail competition for everyday essentials. She emphasized the Bureau’s broader focus on barriers throughout the food supply chain, with the goal of delivering lower prices, more choice, and increased innovation to consumers.
Sarah Dawson, spokesperson for Empire, said the company is pleased to have resolved the matter of property controls with the Competition Bureau and highlighted the firm’s commitment to complying with the new obligations.
Data & Statistics
- A 2023 Competition Bureau study concluded that property controls could impede new grocery competitors and recommended governmental measures to restrict their use.
- A recent consumer study found that nearly half of Canadians prioritize food affordability over nutrition and taste when making purchasing decisions.
- The Bureau’s 2023 analysis suggested that increasing competition in the grocery sector could help improve food affordability.
Why It Matters / Impact
By eliminating restrictive covenants and limiting exclusivity clauses, Empire’s agreement is expected to open more retail locations to competing grocery operators. This could lead to increased market entry, potentially driving down prices and expanding product variety for Canadian shoppers. The move aligns with broader regulatory efforts to address the concentration of the grocery market and to mitigate the impact of rising food costs on households.
What's Next
The Competition Bureau has indicated that it will publish the findings of its broader examination of food-sector competition in the spring of 2027. The agency’s ongoing scrutiny may result in additional measures aimed at enhancing competition across the Canadian food supply chain.