The federal government is looking to lure international grocery companies into the Canadian market to help create more competition among domestic food retailers.
Industry Minister François-Philippe Champagne is hoping to bring in retailers from the U.S., Germany, Turkey and Portugal to increase competition as Canadians’ grocery bills have skyrocketed in recent years.
“A lack of competition in Canada’s grocery sector means Canadians are paying higher prices,” reads a section of the federal government’s new budget released this week.
Champagne began calling out Canada’s biggest grocery retailers like Loblaws, Metro and Empire last fall for their lack of transparency regarding high price inflation.
He wrote a letter to the antitrust watchdog, the Competition Bureau to take action and “confront abuses” in the market.
Last September, Champagne met with the CEOs of Canada’s biggest grocery chains to discuss their high pricing.
“The large grocery stores have accepted to work with the government of Canada. This is a step in the right direction,” Champagne told reporters after their September meeting. “We’ll keep on pushing them. Trust me, this is just the beginning.”
However, very little materialized from that meeting, which opposition leader Pierre Poilievre later called nothing more than a photo-op.
The federal government then went as far as to threaten a windfall tax on grocery chain’s profits if food prices did not become more stabilized.
Champagne’s actions are in response to Canadian voters expressing their frustration with the continued high cost of living since the pandemic.
Food prices are now 23% higher than they were before lockdown, according to the latest inflation data.
A survey from last fall found that Canadians are putting their grocery bill ahead of their nutrition, with 45.5% of respondents saying the cost of their groceries outweighed the importance of their food’s nutritional value in terms of what they are purchasing.
The minister began bandying around the idea of introducing foreign grocery chains into the Canadian market in February and top officials in the industry department provided Champagne with a list of potential candidates.
An access-to-information request revealed that Champagne is looking into mostly European grocers along with one California-based outlet, called the Grocery Outlet Holding, which has 470 discount retail stores in the U.S.
The most popular European chains the government is attempting to acquire are Germany’s Aldi, which has over 2,000 outlets already in the U.S. and Lidl, owned by the Schwarz Group.
So far, none of the companies have confirmed any interest in opening up retail outlets in Canada.
“Canada needs solutions to help bring grocery prices in check. More competition is a key part of the answer,” read a report from Canada’s Competition Bureau last year.
The report noted that after Aldi opened in Australia, domestic operators were forced to significantly reduce their prices.
“The successful entry of international grocers into the Canadian industry may be the best option to bring about lower prices, greater choice, and increased levels of innovation,” the report said.
A spokeswoman for Metro told the Wall Street Journal that it welcomed further competition from abroad, noting that U.S. chains like Walmart and Costco have already been in Canada for years.
Other companies being looked at by Champagne are Germany’s Edeka Group and Rewe Group and the France-based Les Mousquetaires, among others in Portugal, Spain, Norway and Holland.
