In a move hailed as a win for consumer choice and market fairness, Loblaw Companies Ltd. (TSX:L) has announced it will eliminate restrictive property controls that have limited grocery competition in Canada.
The Competition Bureau welcomed the decision, calling it a “key milestone” that could help drive down food prices by allowing more retailers to enter local markets.
What are property controls — and why do they matter?
Property controls include clauses that restrict what types of businesses can operate in or near Loblaws-owned properties. These have often prevented competing grocers from opening nearby, effectively limiting consumer options and price competition. A 2023 Competition Bureau study concluded that such controls were contributing to higher prices and reduced choice for Canadians.
Commissioner of Competition Matthew Boswell said Loblaws shift shows “encouraging” responsiveness to new legal guidance and public pressure. “More competition can drive lower prices, increased innovation and more convenience for consumers,” Boswell said in a public statement.
The Bureau’s investigation into the grocery sector continues, and it is urging other retailers to review similar practices and ensure compliance with the law.
Why it matters for Canadian shoppers
Grocery prices have been a major strain on household budgets across Canada. According to Canada’s Food Price Report 2024, the average family of four is expected to spend $16,297 on groceries in 2024, a 2.5% increase from 2023. Food inflation may be slowing, but prices remain elevated compared to pre-pandemic levels.
By removing anti-competitive restrictions, Loblaws policy change opens the door for new grocery stores — including independent and discount grocers — to enter neighbourhoods where they were previously blocked. Increased competition could force prices down, offer consumers more choice, and improve access to fresh food in underserved areas.
What this means for investors
For investors in Loblaws (TSX:L), this move could have mixed implications.
On one hand, increased competition may reduce Loblaws market share and pressure margins, especially in urban centres and fast-growing suburban communities. This could affect revenue growth in the medium term and potentially shift investor expectations for the retail giant.
On the other hand, Loblaws (TSX:L) may be pre-empting more aggressive regulatory action and improving its public image at a time when food prices are under intense scrutiny. Demonstrating cooperation with regulators may bolster long-term investor confidence and reduce the risk of legal or reputational setbacks.
Empire Company Ltd. (TSX:EMP.A), parent of Sobeys, has also removed a property control in Alberta following legal pressure — suggesting a broader shift in industry practices and risk assessment among Canada’s major grocery players.
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Bottom line
The Loblaws decision to end property controls could mark the beginning of a more open and competitive grocery landscape in Canada. For shoppers, that may translate into more choice and better prices. For investors, the policy signals a potential shift in strategy — away from dominance through exclusivity and toward long-term reputational and regulatory resilience.
Sources
1. Agri-Food Analytics Lab: Canada’s Food Price Report 2020
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
