Grocers already fiercely competing
Here’s an analogy to help describe the Trudeau government’s industrial policy shambles: Suppose Gary Bettman decides the NHL is not competitive enough, and so to “increase competition” for the Stanley Cup and make things more exciting for fans, he hand-picks two dozen teams from other leagues — the Finnish Elite League, the Swedish Hockey League, Czech Extraliga, and the National League in Switzerland — and invites them to join the NHL.
One problem with this scheme is that teams from those leagues aren’t as good as existing NHL teams. So to even things out, suppose Bettman decrees existing NHL teams must forthwith play the last three minutes of every period shorthanded, their goalie must use a regular player’s stick, and the goal they are defending will be widened by six inches for the last ten minutes of the game. Moreover, the newly joining teams will be allowed to ice the puck even if not killing a penalty and will be given an extra skaters during the first, third, and fifth minutes of play in each period.
As hockey fans would regard this attempt to “increase competition” in the NHL as preposterous and absurd, so too should Canadians regard as preposterous the Trudeau government’s recent efforts to increase competition in the grocery sector. These efforts began in earnest in 2022 with a series of attacks on the grocery companies currently serving the market. Members of Parliament from all parties interrogated executives from Loblaw, Empire Company (owner of Sobeys and other brands), Metro, Walmart, and Costco about their financial and corporate strategies, castigating the companies for allegedly earning too much money, making grocery prices too high, and paying employees too little.
Then came the Trudeau government’s threats of special taxation and random government orders that changed the rules of the game in the grocery sector in ways that made no sense. Industry Minister François-philippe Champagne issued instructions to the five major grocery companies to stabilize prices and promised that unless they offered aggressive discounts on key food products there would be more government action to enforce “food price stability.” The government established a “Grocery Task Force” to monitor grocery stores actions and investigate them for supposed practices the government considers to “hurt consumers.” The government then forced a “Grocery Code of Conduct” onto the industry to tighten its grip on how companies operate and gave the Competition Bureau more power to investigate grocery companies if they are “behaving unfairly.”
After slapping these penalties and restrictions onto existing grocery companies and the consumers they serve, the federal government now claims to be working to increase competition by luring new companies into the Canadian market. The Wall Street Journal reported Thursday that the industry minister “is weighing a list of a dozen foreign grocery companies — from the U.S., Germany, Turkey and Portugal, among others — to potentially lure to the country in a bid to increase competition in the domestic food-retailing sector.” Luring two automobile companies to set up electric vehicle battery plants in Ontario last year already cost taxpayers nearly $30 billion; what market distortions the federal government might impose and how much taxpayers’ money it spends on this latest initiative is anyone’s guess.
Why are international grocery companies reluctant to come to Canada as it is now? One explanation is that over eight years of reckless fiscal and regulatory policy from the federal government have depressed investment all around. Additional explanations have been given by those international grocers themselves. The Competition Bureau asked international grocers what keeps them out of Canada and reported, “All of the international grocers we spoke to said that they would face tough competition from Canadian grocers if they entered Canada.” Moreover, existing private labels in Canada are very popular: all the international grocers “believe these are high-quality products and good prices.”
In other words, we don’t have more international grocers in Canada because the existing companies serving the market are already competing fiercely with each other and are providing shoppers with excellent prices and quality. The Trudeau government’s reaction thus far has been to try to take control of grocery prices and quality through “price stability” diktats, codes of conduct, and threats of punitive taxation — and then try to lure international grocers to Canada for no apparent reason other than to be able to say it increased competition. But when the government centrally plans who will compete and how they must compete, that’s not real competition. That’s just preposterous.