Empire CEO rebuts Loblaw stance on grocery code of conduct, says won't lead to higher prices

The chief executive of Sobeys’ parent company Empire (EMP-A.TO) is urging the federal government to implement a grocery code of conduct, something he says will not raise food prices for Canadians.

“An effective code of conduct is a key pillar of our plan to help further stabilize food prices for Canadians,” Empire CEO Michael Medline told the House of Commons agriculture committee on Monday.

“Although we are ready, willing and able to sign the code today, we have serious doubts as to whether the code will actually come into effect due to recent opposition by some retailers. In no way do we believe, nor does evidence show, that a grocery code of conduct would lead to higher food prices or less choice for Canadians. In fact, quite the opposite.”

Loblaw (L.TO), Canada’s largest grocery chain, last month submitted a letter to the steering committee developing the code, saying it was worried the code could “raise food prices for Canadians by more than $1 billion.” The grocery chain said in the letter, obtained by The Canadian Press, that it cannot endorse the code in its current form. A Walmart Canada spokesperson in late October also said the company supports initiatives benefitting customers but it is “conscious of adding unnecessary burdens that could increase the cost of food for Canadians, especially during inflationary times.”

While Medline did not specifically name Loblaw or Walmart Canada, he says that “there are one or two large grocers who do not support the code in its current form, or maybe any code, and that’s slowing things down, obviously.”

“Please help us push this code through the finish line,” Medline told the agriculture committee on Monday.

“I wouldn’t say it’s on life support, but it’s in dire straits, because those who don’t like the code are stalling. They’re saying things that aren’t true and they’re hurting our chances of putting the code forward.”

The grocery code of conduct is aimed at setting standards for dealings between suppliers and grocery retailers. The process of creating a code was initiated to address fees that large grocery retailers charge suppliers, an issue that cropped up in 2020.

'Not a huge ask'

Industry Minister François-Philippe Champagne met with the top executives from Canada’s biggest grocery chains earlier this year to discuss efforts to stabilize food prices. While grocery price growth has declined in recent months from its peak of 11.4 per cent year-over-year in January, it remains higher than headline inflation. The cost of food purchased from stores increased 5.4 per cent annually in October, compared to the headline inflation rate of 3.1 per cent.

Champagne said in a statement in October about the efforts to stabilize food prices that the grocery code of conduct “will contribute to improving the strength and resilience of Canada’s supply chain” and that the government “looks forward to the implementation of the code and to the results it will produce.”

Medline says it would be “a sad day for Canadians and for the industry” if retailers do not sign onto the code.

“This code is not a huge ask. It asks this industry to act with respect, it asks some very basic rules that apply and people just do in other retail other than grocery and it would be a missed opportunity of epic proportions,” Medline said.

Medline appeared at the committee as part of a study into the efforts to stabilize food prices in Canada. He says the grocery chain has implemented a price freeze on all packaged products – representing approximately 20,000 items – between the first Sunday of November and the first Sunday of February 2024. He would not disclose additional efforts to stabilize food prices, saying "they remain commercially and competitively sensitive until launched in our stores."

With files from The Canadian Press

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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