The federal committee studying food prices re-iterated threats to Canadian grocers that failure to agree to a proposed ‘voluntary’ grocery code of conduct will result in forced compliance through legislation.
During a February 15 meeting of the House of Commons Standing Committee on Agriculture and Agri-Food, chair Kody Blois announced the committee would be sending letters to the nation’s five main grocery chains about the consequences of not adopting the code. Both Loblaws and Walmart have expressed opposition to the current iteration of the code, saying it would ultimately raise grocery prices for consumers.
In the committee session, Blois said the letter would reflect “this committee believes in the grocery code of conduct and we will be writing the CEOs expressing our complete desire for them to adopt that code.”
Excerpts from the actual letters obtained by the Canadian Press state: ”This Committee will not hesitate to recommend that the federal and provincial governments adopt legislation to make it mandatory.” The letter further states; “We share the view of the overwhelming majority of stakeholders that the Code’s implementation will provide stability to suppliers and retailers, as the implementations of similar codes in Australia and the United Kingdom have demonstrated.” The letter also notes that Competition Bureau representatives do not have concerns about the code’s provisions.
Trading Economics reported that at the end of December 2023, year-over-year food price inflation in Canada was 5 per cent, in the United Kingdom 6.9 percent and in Australia 4.8 per cent.
The impetus for an industry code was to level competition between smaller and larger grocers. Currently, larger retailers can place more pressure on suppliers and use that lever to lower their costs. Developed by a committee from the grocery industry, the code’s guiding principles are “transparency and certainty” as well as “fair dealing across the value chain.” Loblaw did not have a member on the industry committee that developed the code.
In published responses to the Agri-Committee reminder, both Loblaws and Walmart representatives pledged to continue working with the industry on a code that is fair to all.
“We have been and remained committed to working with the industry on a code that is reciprocal, fair and based on good faith dealings across the supply chain,” Loblaw’s Catherine Thomas told Canadian Press.
Walmart spokesperson Sarah Kennedy said; “While we have significant concerns about the code in its current form, we will continue to work constructively with the industry on this topic.”
In testimony to the same committee in December, Loblaw chairman Galen Weston outlined his firm’s objections to the code, noting “I must say I am perplexed as to why other industry leaders are making such confident claims about the Code’s ability to stabilize prices when it was never intended to do so.”
Michael Graydon, chairman of the interim board of directors of the Grocery Code of Conduct, said Loblaw’s proposed changes would allow them “to continue to have unilateral decision power” and “that is fundamentally why we need a code.” Graydon also serves as Chief Executive Officer of Food, Health & Consumer Products of Canada, which calls itself “the voice of Canada’s leading food, health, & consumer product manufacturers.”
Federal Agriculture Minister Lawrence McAulay and Industry Minister Francois-Philippe Champagne have jointly threatened a variety of legislative measures, including tax reforms if industry participants fail to properly engage in reforms to support price stabilization.
There are many complications in turning the proposed code into legislation.
For one, drafted as a voluntary agreement, the current code language does not include penalties or enforcement measures. In addition, legislation usually includes steps such as identification of a marketplace failure to consumer detriment, public comment periods and impact assessments.