The Manitoba government is confronting Sobeys, the prominent grocery retailer, over its restrictive property contracts, which officials argue hinder market competition. On Thursday, the government declared its intention to bring this matter before the provincial municipal board, following the introduction of legislation last year that forbids the use of “restrictive covenants” in land transactions that could prevent new grocery stores from operating near existing ones.
Government’s Stance: A Push for Fair Competition
Mintu Sandhu, the minister responsible for public service delivery, strongly condemned Sobeys’ practices, asserting, “Each and every one of these predatory property controls is against public interest. When we allow a company like Sobeys to block competition, it makes it easier for them to raise prices.” The province’s focus is directed at four specific Sobeys-owned properties, with expectations for a board decision within the next six to eight weeks.
Premier Wab Kinew highlighted that, post-legislation, all major grocery chains had abandoned their property restrictions—except for Sobeys. The government has reached out to the executive team at Empire, Sobeys’ parent company, to discuss these concerns, but Sandhu reported a lack of response thus far.
Sobeys’ Property Controls Under Scrutiny
According to provincial officials, Sobeys currently maintains 43 property controls that predate the recent legislative changes. Notably, one of these restrictions extends into a nearby farmer’s field, while another is set to remain effective for decades. Kinew expressed concern, stating, “That means there’s no competitor allowed to set up shop even in the farmer’s fields or even across the streets, a long ways away from where this grocer is actually doing business.” He concluded, “If this wasn’t benefiting the company’s bottom line, they wouldn’t be doing it.”
The issue of restrictive covenants has also caught the attention of the federal Competition Bureau, which last year encouraged retailers and landlords to either eliminate or amend competitor restrictions that lack justification. A 2023 grocery market study by the bureau found that such property controls can severely limit competition from new entrants, ultimately denying consumers the advantages that competition can provide.
Economic Context: Inflation and Food Prices
Recent data from Statistics Canada indicates that Manitoba’s inflation rate surged to three per cent last month compared to the same period in 2022, with food costs identified as a primary contributor to this inflationary pressure. In light of this economic climate, Kinew was questioned about whether the removal of property controls has had any positive impact on food prices for families. He acknowledged that while the immediate effects of striking down a property control might not lead to a rapid influx of competitors, the long-term outlook is promising. “Obviously, if a property control gets struck down, competition isn’t going to rush in the following day. It’s going to take some time for the business case to be built and for a new tenant to set up shop,” he explained. “But over the long term, this will drive down grocery prices.”
Why it Matters
The ongoing battle between the Manitoba government and Sobeys could have significant implications for the grocery sector in the province. By challenging restrictive property controls, the government aims to foster a more competitive market environment, ultimately benefiting consumers through lower prices and increased choices. As inflation continues to strain household budgets, the outcome of this dispute may play a crucial role in shaping the future landscape of grocery retailing in Manitoba, offering a potential blueprint for other regions grappling with similar issues.
