Report on grocery pay finds cartel-like practices

Canada's competition laws should be changed to prohibit cartel-like practices and wage-fixing deals in the country's grocery sector, a new report by the House of Commons industry committee presented in the lower chamber on Wednesday said.

The report comes a year after Canada's big three grocers — Loblaw Companies Ltd., Metro Inc. and Sobeys parent company Empire Company Ltd. — all cut temporary pandemic-related pay bonuses within a day of each other last June.

The move prompted the committee to hold hearings on the issue and invite senior grocery executives to explain their decisions.

While the food retailers admitted to communicating with each other about ending their respective wage premiums of about $2 an hour, they denied co-ordinating the termination of the pay bumps.

Metro president and CEO Eric La Flèche said he reached out to his counterparts at Loblaw and Sobeys to gather information — not to obtain a tacit agreement on wages.

"The more information I have on what others are doing, how they are treating their employees and how much they are paying and for how long, is valid information that I tried to get," he told the committee last July.

But competing grocers communicating about wages at the executive level risks "a slippery slope towards cartel-like conduct," Matthew Boswell, commissioner of competition at the Competition Bureau, testified during the committee's hearings.

Yet the bureau lacks the power under the Competition Act to prosecute such behaviour and faces significant resource constraints, he said.

Canada’s competition legislation diverges from laws in the United States, where federal competition authorities can criminally prosecute wage-fixing agreements, Boswell told the committee.

The bi-partisan committee recommended Ottawa align Canadian competition legislation with American legislation in order to to criminally prosecute such agreements.

"Doing so would clarify competition-related obligations for businesses active in Canadian and American markets, and facilitate co-operation between competition authorities in Canada and the U.S.," the report said.