Loblaw deal means sale of area Shoppers stores

Grocery chain must put Westlock, Devon, Innisfall locations on block

Loblaw has received the goahead from the Competition Bureau to acquire Shoppers Drug Mart, but there are conditions.

Canada’s largest grocery chain must sell 18 stores and nine pharmacies as part of a consent agreement with the federal watchdog. The list includes the Shoppers Southport Common in Devon, the Shoppers Simply Pharmacy in Westlock and the Henday Centre Shoppers in Innisfail. All the stores to be sold are in smaller communities and include 14 Shoppers and four Loblaw outlets.

The company does not anticipate any store closures.

The Competition Bureau also placed “behavioural restrictions” on certain agreements with suppliers for up to five years. Some suppliers have complained that the country’s largest grocery chains use unfair practices, and have called for an industry code of conduct.

The bureau was concerned about programs that require suppliers to compensate Loblaw for a predetermined profit margin. It determined that without restrictions, the deal would likely lead to higher wholesale prices paid by other retailers and consumers, in some cases. The bureau says it will continue to investigate certain pricing programs and agreements Loblaw has made.

“Loblaw is committed to supplier practices that meet the bureau’s objectives of maintaining competitive markets,” the company said Friday. John Pecman, commissioner of competition for the bureau, said “this agreement addresses the most significant negative competitive effects of the merger by ensuring that consumers continue to benefit from competitive prices in the retail sale of drugstore and pharmacy products in Canada.”

The $12.4-billion transaction, which was announced in July 2013, is scheduled to close next week. It would create a combined retailer operating about 2,738 stores and 1,824 pharmacies across the country.

“This merger uniquely positions Loblaw to meet the most important consumer trends in the country, including urbanization and health and wellness,” said executive chairman Galen Weston.