In 2024, Crowsnest Pass, Alberta, became an unlikely Ground Zero in the Competition Bureau of Canada’s battle against grocery-store restrictive lease covenants and exclusivity clauses.

Two years later, only one grocery store remains in Crowsnest Pass – and more competition is not expected to arrive any time soon.

The town was considered too small to support a second grocery retailer then, and even though the town’s current grocer (IGA) is planning to move to a new location in the town, no grocers are lined up to lease the old space, or any other space. 

The Competition Bureau identified lease restrictions as a barrier to competition in its 2023 report on the competitiveness of grocery retailers, and it gained the power to target property controls in a subsequent revision to the Competition Act. 

A restrictive lease covenant is a restriction on land use that prevents a commercial property purchaser or owner from operating, or leasing to others, certain types of businesses, particularly grocery stores that compete with a previous owner. An exclusivity clause limits how land can be used by a tenant’s competitors.

Restrictions are common in other retail formats, and the Bureau frowns on those as well. It has succeeded in convincing most major grocery chains to remove property controls on leases. Empire Company, parent of the IGA store in Crowsnest Pass, agreed with the Bureau’s request, and the Bureau’s celebratory release noted that “a new grocery-store competitor can move forward with plans to open a second store in Crowsnest Pass in 2025,” and that “more competition helps make groceries more affordable and increases product options for the residents of Crowsnest Pass.”

The Bureau’s wording made it sound like there was another grocer ready to move in, but the word “can” in the Bureau’s release was closer to “could” than “is now ready to”. 

No new grocery store opened in Crowsnest Pass in 2025. The IGA is planning to relocate to the new Crowsnest Crossing shopping centre in 2027. The existing location will close, and no other grocery store is expected to take its place. 

Jeremy Roden, a real estate broker who negotiated the lease on the future IGA store at Crowsnest Crossing, estimated that it will take eight to 12 years for a national grocer to open a second major store in the area.

“Until this grocery store – the IGA – makes that relocation come to fruition and opens, we have to determine how the market reacts to it, especially in a smaller market,” said Roden. “Typically, you open the store, determine the sales volume, look at projections and then determine whether another grocery store would perform well. In small markets with populations in the 8,000 to 12,000 range [such as Crowsnest Pass], that’s usually how it works.”

The IGA is relocating because ownership sought a larger store. The new location is 25,000 square feet, while the current store spans 18,000. 

The new Crowsnest Crossing development does not have space large enough for a second grocery store, said Roden. He added that Sobeys/Empire does have a restrictive lease covenant preventing another grocer from operating at Crowsnest Crossing. Empire has asked the federal government to legislate an end to exclusivity clauses rather than relying on the Bureau’s authority to eliminate them. Loblaw has pledged to ease its restrictive lease covenants, and Walmart has agreed to scrap them.