'Higher prices and empty shelves:' Loblaw, Walmart Canada raise concerns over grocery code of conduct

Top executives from Loblaw (L.TO) and Walmart Canada (WMT) said on Thursday they would not sign on to a grocery code of conduct in its current form, with the leader of Canada’s largest grocery chain citing concerns about higher costs.

Speaking before the House of Commons agriculture committee on Thursday, Loblaw chairman Galen Weston – who stepped out of the role of CEO this year – says the company is concerned that the proposed code of conduct could slow down momentum when it comes to stabilizing food prices.

“While the principles of the code as it is currently set up are sound, when you get into the details there is significant risk of higher prices and empty shelves,” Weston said.

“I’m worried that amid our collective enthusiasm to deliver meaningful relief for Canadians on the cost of food, we are travelling towards something that will do exactly the opposite, simply because it sounds good.”

The grocery code of conduct, which has been in development for years, 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.

Earlier this week, Empire (EMP-A.TO) chief executive Michael Medline urged the federal government to implement the grocery code of conduct, saying it will not raise food prices for Canadians. Medline told the agriculture committee on Monday that the code was “in dire straits because those who don’t like the code are stalling.”

Loblaw had previously said it was worried the code could "raise food prices for Canadians by more than $1 billion." On Thursday, Weston raised concerns with the committee over four specific aspects of the proposed code.

“In our judgment, each one increases the likelihood of higher retail prices, or fewer products on the shelves, directly or indirectly. I must say I’m perplexed as to why other industry leaders are making such confident claims about the code’s ability to stabilize prices, when it was never intended to do so,” Weston said.

“We’ve always said that we would sign the code. We just need to sign a code that doesn’t increase the risk of higher food prices for Canadians.”

Walmart Canada chief executive Gonzolo Gebara also appeared before the committee on Thursday, and said the company has raised concerns on “a couple of points” in the code that “are not going to help with either having a better environment for producers, distributors and retailers to run better businesses, or lower prices.”

“We are not in a position at this time to commit to it,” Gebara said of the code.

This comes as federal and Quebec agriculture and food ministers call on all members of the grocery industry supply chain to sign on to a code of conduct. Federal Agriculture Minister Lawrence MacAulay and Quebec Agriculture Minister André Lamontagne said on Thursday they're disappointed to see the grocery code of conduct has still not been launched after years of work.

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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