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Erika Douglas, Mark Katz, Jun 30, 2014
Perhaps more than ever, tensions between suppliers and retailers have become the defining feature of the grocery industry worldwide. These tensions have also frequently formed the basis for interventions (or proposed interventions) by competition enforcement authorities in this sector.
Canada is no exception to this global trend. The Canadian retail grocery industry is intensely competitive, with retailers surviving on razor-thin margins. Not surprisingly, margins and pricing pressure at the retail level have led Canadian retailers to seek relief from suppliers. This has generated considerable tension and also provided the backdrop-or source-for calls for competition law intervention.
In recent months, for example, the Canadian Competition Bureau has completed two lengthy merger investigations in the grocery sector where retailer/supplier relations became a key issue of focus. Retailer/supplier tensions have also given impetus to a debate in Canada over how far the Bureau should go in “regulating” pricing conduct in the industry (and more generally), with particular sensitivities raised about the “price gap” between Canada and the United States. Finally, this ongoing dispute has generated the suggestion in some quarters that Canada should follow the U.K.’s lead and adopt a form of “code of conduct” to govern retailer/supplier relationships in the grocery industry. We consider these developments below.