Empire defends code of conduct

But grocery chain’s CEO says move won’t fix all factors that drive up prices

There’s no evidence that a grocery code of conduct would raise food prices for Canadians, said Empire Co. Ltd. chief executive Michael Medline.

He told an audience at a Retail Council of Canada event in Toronto on Tuesday he wouldn’t support a grocery code of conduct for his industry if he thought it would raise food prices. Medline, who was the first grocery executive to speak out in favour of a code, said he hopes the grocery code could lead to lower food prices in the future, but added it’s not a panacea “for all the issues that drive up prices.”

Last fall, Loblaw and Walmart said they wouldn’t sign on to the code as currently drafted, stalling progress as the agreement neared completion. Proponents of the code say it will help level the playing field for suppliers and smaller grocery retailers by introducing rules for negotiations between industry players. It would also include a dispute resolution process.

But Loblaw and Walmart have said they are concerned it would raise food prices for Canadians.

The impasse has led to talk of the code being made mandatory instead of voluntary, with the House of Commons committee tasked with studying food prices telling Loblaw and Walmart that if they don’t sign on, the committee will recommend the code be made law.

Medline said he’s frustrated at how long the code has taken, but still believes there’s a way to keep it industry-led instead of bringing in legislation.

“It’s high time this was brought to a close,” the president and CEO of Sobeys’ parent company said.

There’s no code without all the retailers, Medline added in an interview after the event.

“I think everyone’s caught in a bit of a stalemate right now trying to figure out how to put pressure on the parties that won’t sign,” he said. “I think it’s a bit of a game of chicken here.”

Discussions about the code are ongoing with all retailers, said Doug Nathanson, Empire’s executive vice-president, chief development officer and general counsel, in an interview.

“We’re not giving up, so it’s not at a standstill. We’re trying to get everyone’s consensus,” Nathanson said.

Medline said he believes the code represents a better way to do business. Having come to the grocery industry from Canadian Tire, he said he was surprised to learn of some of the practices that were rampant in the sector.

These included fees such as the ones introduced by Loblaw and Walmart on suppliers in 2020 to help pay for infrastructure investments.

While talk of a code preceded that, Medline said he thinks that was the proverbial straw that broke the camel’s back, finally pushing the industry to start developing a code.

In his talk, Medline also called on the Competition Bureau to end its ongoing bread price-fixing investigation, calling it “misguided from the start.”

Medline said Empire did not participate in fixing the price of bread in Canada, and said the ongoing investigation has damaged the retailer’s brand.

The Competition Bureau began investigating the alleged bread price-fixing agreements in January 2016. Weston Foods and Loblaw Cos. Ltd., both subsidiaries of George Weston at the time, previously admitted their participation in an “industry-wide price-fixing arrangement” and have received immunity from prosecution in exchange for their co-operation.