In the realm of competition within the food industry, Canada finds itself trailing behind its neighbour to the south. While both nations grapple with antitrust concerns, the United States distinguishes itself through its unwavering vigilance against monopolies and publicly owned entities.
Notably, the U.S. Department of Justice actively pursues companies and their executives, often leading to convictions and jail sentences. Remarkably, their investigations are characterized by swiftness, taking mere months instead of dragging on for years. Even complex cases, such as the canned tuna price-fixing scandal, have been met head-on.
Conversely, in Canada, we predominantly rely on corporate goodwill, hoping that companies will voluntarily plead guilty in exchange for immunity. Take, for instance, the bread price-fixing scandal, in which Grupo Bimbo, now the owner of Canada Bread, was fined $50 million but continues to engage in business with the federal government. In stark contrast, Loblaw and Weston Bakeries received immunity by blowing the whistle, and the investigation remains ongoing – an astonishing eight years and counting. The disparity in approach is glaring.
U.S.-based companies have become remarkably cautious and strategic when pursuing mergers and acquisitions. A prime example is the Kroger-Albertsons saga, where Kroger divested itself of over 413 stores to secure regulatory approval, a move akin to Canada’s leading grocer Loblaw’s selling 354 stores prior to an acquisition. It represents a fundamentally different landscape.
According to Mark Warner, a prominent Canadian competition lawyer, Kroger is taking proactive steps to address potential Federal Trade Commission (FTC) concerns in the U.S. They are proposing sales as remedies, effectively challenging the FTC to block the merger and leaving the decision to a judge to assess the remedy’s effectiveness. This trend may become more commonplace among well-funded merging companies, particularly as antitrust enforcers become more proactive. In the past, before the Biden administration, antitrust agencies were more inclined to accept proposed remedies and approve mergers. Canada, it appears, still adheres to a similar approach.
Significant transactions have been scarce in Canada lately, reflecting, as Warner suggests, a potential shift in the activist landscape. The most recent major deal, Sobeys’ acquisition of Safeway, required a consent agreement and the sale of 23 stores – merely 1.5 percent of Sobeys’ total operations. This pales in comparison to the rigorous oversight happening in the United States. Notably, some of those 23 stores divested by Sobeys remain closed even after a decade.
However, we must confront a stark truth. While Congress scrutinized the Kroger-Albertsons deal from its inception, few Canadians raise an eyebrow when major grocers change hands. In Washington, antitrust concerns evolved into a highly politicized issue, compelling the involved companies to publicly acknowledge public apprehensions. Now, with food prices on the rise, Canadians are beginning to genuinely care about how the architecture of the industry influences food pricing.
One major divergence between the United States and Canada becomes evident: Lawmakers and policymakers in both nations reached a consensus many years ago that the intricacies of the food industry are too complex for the general public to fully grasp. Instead, the paramount concern of the public lies in how the industry directly affects their daily lives, particularly in terms of food affordability, access, and safety. Consequently, lawmakers in the United States have been willing to proactively shoulder the responsibility of addressing these concerns on behalf of their fellow citizens.
Canada, on the other hand, has opted for a different approach. Many politicians have resorted to accusations of corruption and the “greedflation” campaign as their primary strategies. Regrettably, these tactics often discourage the broader public from engaging with and comprehending the intricacies of food distribution and policies.
When we assess the challenge of fostering competition within the food sector, it becomes unmistakably clear that this is a substantial obstacle confronting both nations. Yet, the fact that Canada is even contemplating emulating what France has recently undertaken – calling upon the food industry to freeze prices of 5,000 products – serves as a poignant reminder of how out of touch our lawmakers are with the workings of our own country.
If Canadians do not voice their concerns and demand change, they will ultimately receive the food industry they are willing to tolerate.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
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