Common retail lease clauses are under scrutiny as Canada’s Competition Bureau investigates how property controls may help major grocery chains dominate the market. A newly obtained federal court order directs Empire Company Limited and George Weston Limited — the parent companies of Sobeys Inc. and Loblaw Companies Limited — to produce documentation pertaining to their leases and land titles in the Halifax Regional Municipality.
The initiative is part of the Competition Bureau’s broader investigation of whether dominant grocery retailers are employing instruments such as exclusivity clauses and restrictive covenants to improperly curtail competition. Exclusivity clauses in leases prevent landlords from renting space to businesses selling similar products or services, while restrictive land covenants prevent commercial operators from conducting certain types of business activities.
“There is no conclusion of wrongdoing at this time,” a statement from the Competition Bureau affirms. “This information will help determine whether Sobeys and Loblaw are imposing anti-competitive restrictions on the use of real estate, known as property controls, that impact competition in the retail sale of food products.”
The investigation follows from the Competition Bureau’s 2023 study of Canada’s grocery market, which concludes that more players and rivalry are needed. Provincial/territorial governments hold constitutional jurisdiction over commercial property transactions, but the Competition Bureau recommends that they consider implementing “measures to limit property controls” in the grocery sector or even outright banning them, and notes that such measures have been imposed in the United Kingdom, Australia and New Zealand.
In its discussion of how exclusivity clauses undermine competition, the market study characterizes commercial landlords as oppressed rather than in collusion. “A landlord may agree to this kind of property control because grocery stores attract significant numbers of customers, and because they may be unsure whether the grocer will agree to sign a lease otherwise,” it states.
