Competition Bureau investigates restrictive real estate covenants in Canadian grocery sector

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The Competition Bureau says it is investigating the use of ownership clauses, which limit how real estate can be used by competitors, in the Canadian grocery sector.

Watchdog says clauses make it harder to open new supermarkets

A shopper in a brown jacket looks at meat in a grocery store aisle.
A customer shops at the Metro grocery store in Montreal on October 26, 2022. The Competition Bureau says it is investigating the use of ownership clauses, which limit how real estate can be used by competitors , in the Canadian grocery sector. (Ivanoh Demers/CBC)

The Competition Bureau says it is investigating the use of restrictive real estate clauses in the Canadian food sector.

Deputy Commissioner Anthony Durocher told a House of Commons committee studying food prices that these measures, often called “property controls”, can pose a major barrier to market entry and expansion canadian.

In the Bureau’s June 2023 report on competition in the grocery industry, it describes real estate controls as clauses added to a lease or deed that limit how real estate can be used by competitors.

This may include limiting the types of stores that can open in a shopping center or limiting the type of store allowed to open in that location after a tenant leaves the property.

For example, if a grocery store moves nearby, the ownership control clause could prevent a competitor from entering the old store.

The Bureau’s report recommends that governments limit the use of these clauses in the sector, saying they make it more difficult to open new supermarkets and can dampen competition.

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