‘It’s time’ for grocery sector code of conduct
The chief executive of Canada’s second- largest supermarket chain criticized two of his chief competitors on Wednesday for foisting a set of “repugnant” new fees on suppliers.
Michael Medline at Empire Co. Ltd. — which owns Sobeys, Safeway and Freshco — said the fees announced by both Walmart Canada and Loblaw Cos. Ltd. will hurt manufacturers, farmers and smaller grocers, and threaten to drive up prices for consumers.
“Taken to the extreme, some of these behaviours are just plain bad for Canada,” he said during a virtual event hosted by the Empire Club of Canada. “It’s just not right.”
Medline suggested the grocery sector is ready for a code of conduct, echoing manufacturing advocates that have been pressuring the federal and provincial governments to rein in bullying tactics in the heavily consolidated industry.
The former CEO of Canadian Tire Corp. Ltd. who joined Empire in 2017 said he finds that grocers and suppliers have “the worst relationship I’ve ever seen in my couple of decades in retail.”
His comments are liable to intensify the debate over an industry code of conduct, which ramped up in July after Walmart Canada imposed a non- negotiable fee on suppliers of up to 6.25 per cent on the cost of goods to help pay for its $ 3.5- billion infrastructure investment.
Manufacturing associations warned that other major chains would follow with similar fees and Loblaw last week told suppliers it would levy a new 1.2- percent fee, as well as increased distribution and marketing charges, noting it was investing $ 6 billion on infrastructure over the next five years.
“I don’t think a government unilaterally coming in and putting in legislation will probably help, because it’s a very complex industry and I don’t want unintended consequences,” Medline said. “It’s time that we got together as an industry and had a set of very simple, value- driven ground rules so that we don’t get in this mess and that we have a very healthy food supply chain.”
The federal government has said it does not have the jurisdiction to regulate the grocery industry, but encouraged the provinces to look into it.
In a letter this week, a coalition of trade groups representing farmers, food processors, bakers and independent grocers urged federal Agriculture Minister Marie- Claude Bibeau and Ontario Agriculture Minister Ernie Hardeman to raise the issue when they co-chair the next Federal- Provincial-territorial Ministers of Agriculture and Agri- Food meeting in November.
“It is unfortunate to see grocers impose these costly fees during this pandemic,” Bibeau’s office said in an email on Wednesday. “We are pleased to see the interest from some of our provincial counterparts to examine this matter.”