April 7, 2014
Earlier today the Competition Bureau issued remarks from the Canadian Commissioner of Competition’s (John Pecman) talk in Vancouver at the Grocery Showcase West of the Canadian Federation of Independent Grocers (CFIG).
With a number of interesting recent Canadian grocery and retail developments, including the new entry by U.S. retailers (e.g., Target) and Loblaw/Shoppers merger, competition in the grocery sector has been receiving a significant amount of media, consumer and Bureau attention over the past few months.
Some of the competition related issues that Canadian grocers, suppliers and existing incumbents face include: new (U.S.) entry; consolidation (e.g., the recent Loblaw/Shoppers merger); retail liquor retailing debate in Ontario and BC; and a general continued trend toward the web (e.g., show-rooming, expanded Amazon offerings, etc.).
Some key remarks by Commissioner Pecman earlier today that caught my eye include the following (a few quotes and how I read them):
1. “The average Canadian interacts with you [grocers] on a weekly — and in some cases daily — basis, and when they do, they’re connecting with their most basic needs and simplest desires as consumers.” Read: The Bureau remains interested in advocacy and enforcement in high-impact consumer impact industries.
2. “The business community promotes compliance by developing and adhering to corporate compliance programs.” Read: Adopt and maintain a competition compliance program.
3. “… the Bureau has placed a strong focus on compliance and compliance promotion. We have engaged an expert to help us determine how we can best promote voluntary compliance and ensure that we have the right incentives in place to support this objective.” Read: The Bureau wants more voluntary compliance than is being achieved now, likely in advance of formulating its recently announced new competition compliance bulletin. A public consultation on the Bureau’s new approach to competition law compliance is expected in the near future.
4. “Our role is to protect open markets and ensure fair competition — it is not to protect competitors. We’re not there to ensure that particular businesses continue to exist — we’re there to ensure that everyone is able to compete on a level playing field.” Read: The Competition Bureau does not pick winners and losers; under Canada’s competition laws, particular market distortions are subject to enforcement. No change here, just a clarification and reinforcement of what the Bureau does.
5. [Grocery codes of conduct]: “… the Competition Act does not provide the Bureau with the authority to seek an enforceable Code of Conduct. Second, a voluntary Code of Conduct would not provide the Bureau with the authority to compel participation in, or to enforce, such a code. There would be no ability for us to implement or enforce remedies. In short, there would be no accountability.” Read: The Bureau is not a market regulator and does not draft legislation, but is an enforcement agency enforcing the Competition Act. If a grocery code of conduct were to be enacted, the Bureau may be called upon to enforce it.
6. [Loblaw/Shoppers merger]: “The Bureau regularly resolves competition concerns through negotiated Consent Agreements. We prefer to address anti-competitive mergers and other conduct by mutual agreement rather than proceeding on a contested basis to the Competition Tribunal; however, the Bureau will not compromise its responsibility to preserve competition in the marketplace.” Read: The Bureau prefers to settle merger cases, like some other types of issues that arise under the Competition Act, via consensual negotiation and settlements not litigation; but will litigate if it decides it must.
7. “There is something else I would like to raise. As some of you will be aware, through the analysis of the Loblaw/Shoppers transaction, the Bureau has become aware of certain conduct by Loblaw with respect to its suppliers that could raise concerns under the Competition Act.” Read: If the Bureau reviews one of your organization’s practices it may, and in some cases does, pursue other issues. Further, the Bureau may also share information received, whether on a voluntary basis or through compulsory production, with other enforcement agencies – another sensible reason for upfront compliance versus probe.
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