The revelation that Loblaw will end its 50 per cent discount on perishable foods like meat, fruit, and vegetables as they near their best-before dates has raised concerns about potential anti-competitive behavior. Industry expert Prof. Sylvain Charlebois, the director of Dalhousie University’s Agri-food Analytics Lab, believes that Loblaw’s decision to align its policy with other food retailers could be considered anti-competitive and should attract the attention of Canada’s Competition Bureau.
Loblaw spokesperson Catherine Thomas explained in an email to Charlebois on Monday that the company is transitioning away from offering a range of 30 to 50 per cent discounts on serve-tonight products, aiming for a more consistent approach that aligns with its competitors. Charlebois, writing in a column for the Toronto Sun, referred to the practice as discount fixing and questioned whether it was a form of collusion.
However, not all experts share the same concerns. Jennifer Quaid, an associate professor of law specializing in competition and business regulation at the University of Ottawa, explained that what Loblaw is doing is known as conscious parallelism – the ability of competitors to observe and imitate each other without engaging in criminal collaboration. Quaid stated that this action does not run afoul of competition laws.
Until recently, Loblaw Cos. Ltd., which owns grocery brands such as Loblaws, No Frills, Zehrs, and Valu-Mart, offered last-day discounts of up to 50 per cent on items approaching their best-before dates. However, the revised policy will now see discounts on perishable goods ranging between 30 to 50 per cent.
The decision to scrap the 50 per cent discount has drawn criticism, particularly from vulnerable Canadians who rely on the lowered prices. Charlebois emphasizes that in a free market, consumers expect grocery stores to be innovative and creative when it comes to discounting. He contends that when companies align their policies based on copying the competition rather than providing unique offerings, it undermines the principles of a free market.
According to Section 45 of the Competition Act, it is illegal for competitors to conspire to fix, maintain, increase, or control product prices. However, there is no evidence of such collusion among grocery retailers regarding the removal of discounts. Emmanuel Morin, a spokesperson for the Competition Bureau of Canada, stated that while they were aware of Loblaw’s announcement, it would be inappropriate to comment on specific conduct in the marketplace.
Ambarish Chandra, an associate professor of economics at the University of Toronto’s Rotman School of Management, believes that Loblaw’s decision does not constitute anti-competitive behavior and argues that the Competition Bureau should focus on investigating grocers’ alleged involvement in the bread price fixing scheme instead.
Ultimately, the question of whether Loblaw’s move is anti-competitive remains a topic of debate. Charlebois and some critics argue that the company’s decision to align its discount policy with competitors raises concerns about collusion, while others, like Quaid and Chandra, maintain that it falls within the bounds of conscious parallelism. As Loblaw moves forward with its adjusted approach, the impact on consumers and the wider grocery industry will become clearer.
