Unable to get one of Canada’s largest grocery chains to give up property controls included in its leases, Manitoba is taking four cases to the province’s municipal board.
Each of those cases involves the lease of a Sobeys grocery store that the province says violates laws it passed in 2025 to eliminate these property controls.
The province has indicated the property control removal is part of a broader campaign to reduce food costs for consumers. Manitoba has announced plans to temporarily suspend provincial taxes on foods, freeze the price of certain containers of milk and study other ways to lower grocery costs.
The link between clauses in a retailer’s lease and the price of groceries is not straightforward. But the principle is that anything in a lease that restricts a competitor from setting up shop nearby decreases competition by establishing localized monopolies, reduces choice and results in higher prices for consumers.
Property controls known as restrictive covenants and exclusivity clauses can allow a tenant (say a dentist or a pizza chain) to ensure that no other dentists or pizza chains can operate in the same plaza. Similarly, grocery stores’ leases may restrict other retailers from selling any food items. A CBC investigation found leases that prevented any food sales on adjacent land without permission of the retailer and restricted the food products a drug store could sell in the same plaza. Other lease terms can prevent landlords from leasing to a different grocer if the current grocer relocates.
Canada’s Competition Bureau identified these clauses as a significant barrier to competition in its 2023 report, as it made it difficult for new grocers to find attractive retail locations. The Competition Act was changed to allow the bureau more authority to challenge these restrictions.
Manitoba passed a law in early 2025 that barred these kinds of clauses in leases for grocery stores. It required businesses to register these kinds of clauses with the province within 180 days, and allowed the province to challenge any of the registered deals through the municipal board. In total, 20 controls that could have been registered were abandoned, and 43 lease clauses involving 25 different retail locations were registered. All the locations belonged to Sobeys or other retail brands (Safeway, FreshCo, IGA) owned by Sobeys parent, Empire.
In March, the Manitoba government sought to meet with Empire leadership, and threatened to take the cases to the Municipal Board for a hearing to determine whether the restrictions are contrary to the public interest.
On April 30, the province announced it was moving forward with cases of seven different property controls involving four grocery stores. Two of the four stores were in Winnipeg, with one each in Steinbach and Brandon. All were Sobeys locations. Published reports indicated one of the Winnipeg restrictions involved property where a Safeway store was closed in 2014, and the Brandon issue relates to a vacant building where Sobeys moved out in 2017, but had signed a lease to prevent others from operating in the space.
Manitoba also passed measures to remove PST from all grocery food items, including prepared meals, carbonated drinks and snacks, to help families cope with higher food prices.
Provincial restaurants objected that measure put them at a disadvantage because their prepared meals for takeout are subject to provincial tax. Convenience stores made the same point about the snacks. Doctors Manitoba said the tax reduction on snacks makes less healthy foods more affordable, with potentially negative effects on public health.