Big grocers' removal of COVID bonus provokes concerns

Canada's competition watchdog is concerned that executives at some of the country's largest supermarket chains held discussions before removing pandemic pay bonuses for their front-line staff on the same day in June.

“Now, more than ever, Canadians expect and deserve vigorous competition for their hard-earned money,” Competition Bureau commissioner Matthew Boswell said in a pre-taxed speech to Canadian Federation of Independent Grocers on Wednesday afternoon. “We must continue to ensure that those with market power do not undermine the competitive process.”

It is the first time Boswell has publicly spoken on the wage cuts.

The heads of Loblaw Cos. Ltd., Sobeys's parent Empire Co. Ltd and Metro Inc. — Canada's three largest grocers — were summoned in July to a House of Commons committee hearing to explain why they had all ended their $2-per-hour temporary wage increases at the same time. At that hearing, Metro CEO Eric La Flèche said he made several calls to competitors in May and June to ask whether they planned to end the pandemic pay. Loblaw president Sarah Davis testified that she sent a “courtesy email” to competitors to inform them in advance of her decision to end the bonuses.

“I heard of such discussions with concern,” Boswell said.

Metro, Loblaw and Empire have strongly denied any wrongdoing and said they did not co-ordinate their decisions to cut the bonus pay. Empire CEO Michael Medline has noted that he insisted on having legal counsel during the call with La Flèche and did not divulge anything about his thinking on ending the bonuses.

Early in the pandemic, Boswell issued guidance on when companies may need to collaborate with competitors in order to keep supply chains intact.

“In general, communications among competitors regarding employee wages would seem to be unrelated to an effective response to the pandemic,” he said on Wednesday.

The Competition Bureau has been under pressure to act on both the wage issue and to establish a code of conduct to rein in what suppliers say are bully tactics from the big grocers.

The pressure comes after Walmart Canada and Loblaw started charging producers more fees to pay for e-commerce and store investments.