National Post (National Edition)
The grocery oligopoly might now pay a price
The decision of Canada’s three grocery behemoths to simultaneously end COVID-19 bonuses on June 13 could end up costing the companies much more than they will save in reduced labour costs on their next few quarterly earnings reports.
Sarah Davis, president of Loblaw Cos. Ltd., Michael Medline, chief executive of Empire Co. Ltd., which owns the Sobeys, Safeway and Farm Boy brands, and Eric La Flèche, head of Quebec’s Metro Inc. had a poor showing at the House industry committee on July 10 by any standard.
They were at times defensive, aloof, dismissive and unforthcoming. They had a tendency to obfuscate; for example, by repeatedly pointing out the absence of Walmart Inc. and Amazon. com Inc., even though the hearing was about the appearance of collusion and there is no evidence at all that the two American companies have done anything but follow their own paths when it comes to pay packets during the crisis.
Shareholders should be disappointed. The mission of the executives should have been to snuff out the spark of disquiet on Parliament Hill over the way certain segments of the Canadian business establishment like to practise capitalism. Instead, they probably made matters worse for themselves.
It might have been bad luck, as it’s fair to have low expectations of House committees. But Davis, Medline and La Flèche confronted a group of relatively younger members of Parliament who insisted on a level of accountability to which the executives seemed unaccustomed. The CEOs ended up inspiring a bipartisan consensus that their conduct is worthy of review by the Competition Bureau, while generating all kinds of material that their workers’ unions should find helpful as collective agreements come up for renegotiation.
There’s every reason to expect that labour relations are about to become trickier for three of Canada’s biggest employers, and the companies’ shareholders should also decide if they have the stomach for political risk because Loblaw, Empire and Metro have become political targets of members of a minority Parliament.
“We learned today that CEOs of these three national grocers had communicated directly with each other about the prospect of ending the modest top-up for essential workers,” Nathaniel Erskine-Smith, the Liberal member of Parliament who roused the industry committee to summon the executives, said on Twitter. “The Competition Bureau will hopefully take it from here.”
It could be a while before Erskine-Smith knows if his hope is fulfilled.
The Competition Bureau rarely discloses whether it’s conducting an investigation, as it is required by law to do its work confidentially. All three executives insisted that they acted “independently,” even as testimony revealed the lines of communication between them were open. It’s quite possible they were behaving as oligopolists, not conspirators, and the bureau has done little to resist the creation of oligopolies in industries such as banking, telecommunications and groceries.
All three executives insisted the communication that occurred between them on bonus pay was legal and conducted with the backing of their lawyers. La Flèche said he was only doing his job by gathering intelligence.
“We operate in a competitive environment,” La Flèche said of Metro. “We want to treat our employees fairly and be seen to be treating our employees fairly. We think we do. The more information I have on what others are doing and how they are treating their employees and how much they are paying, and for how long, is valid information that I tried to get.”
It must also be said that the Competition Bureau has allowed Loblaw parent George Weston Ltd., Empire and Metro to all but take control of Canadian grocery and pharmaceutical retail through various acquisitions over the years, including Loblaw’s purchase of Shoppers Drug Mart Corp. in 2013, Metro’s acquisition of Jean Coutu Group (PJC) Inc. in 2018, and Empire’s addition of Farm Boy two years ago.
But the big grocers could still be facing trouble even if the bureau lets them off the hook.
Their unions have momentum. The pandemic has cast front line workers in a new light, as jobs that had previously been categorized as “low skill” became “essential” in the crisis. The grocers could find it more difficult to compress wage demands going forward, as greater public sympathy for labour would make it easier for unions to credibly threaten strikes.
“Retail workers deserve better, and Canadians expect better,” Jerry Dias, national president of Unifor, the country’s largest private-sector union, tweeted last week. “Grocers can do more than just say nice things about their workers, they can provide better jobs.”
A growing number of their customers, especially some who have the legislative power to do something about it, appear to agree.