Grocery code delayed by dissent from 2 major grocers: board report

The interim board responsible for the development of Canada’s grocery code of conduct says its launch is being delayed by a lack of support from two major grocers.

“We’re at an impasse,” said Michael Graydon, CEO of the Food, Health & Consumer Products of Canada association and chairman of the interim board for the code.

A progress report was sent out to the federal, territorial and provincial agriculture ministers on Wednesday, stating a concern over the lack of universal support from grocers.

“There is a concern that without the full participation of all major grocers, the implementation of the Code would create an unlevel playing field and put affected stakeholders at a competitive disadvantage,” the report reads.

Should the support of all grocers not be gained, the board said it cannot proceed in implementing the required steps to launch the code.

“What we’re faced with now is no consensus and a failure to achieve what industry has told us they would achieve without government intervention. To say this is disappointing would be an understatement,” said federal Agriculture Minister Lawrence MacAulay in an emailed statement on Wednesday evening.

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He says that while the code was intended to be industry-led, it has “failed to meet the moment.”

“We’re actively examining all available federal options – that includes legislation,” added MacAulay.

“I’ve also met with my colleague, (federal Industry Minister Francois-Philippe Champagne), and his provincial and territorial counterparts. As key aspects of the Code would fall under provincial jurisdiction, we asked them to do the same.”

The interim board says it has paused its efforts to hire an adjudicator for the code as a result of Loblaw and Walmart being unwilling to sign on.

Graydon says they cannot start officially recruiting membership either.

Despite “virtually the entire supply chain” having agreed to the code, without the support of the two largest companies other companies are refusing to sign on to rules they believe could then disadvantage them against the industry giants, Graydon said.

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“The code is designed to fundamentally change the behaviour of the large retailers. If they’re not in, then the behaviour doesn’t change. There’s no need for anybody else to join,” he said.

“So until we get this retail situation fixed, we’re at a stalemate.”

Loblaw Cos. Ltd. and Walmart Canada have recently expressed concerns that the code would raise the cost of products for consumers.

Chairman of Loblaw Galen Weston told MPs at the committee meeting last week that the code would leverage too much power for large multinational corporations in negotiating.

The grocer had previously claimed the code would raise food prices in the country by more than a billion dollars.

Walmart Canada chief executive Gonzalo Gebara told MPs that the company is not currently in a position to commit to the code, because of “provisions that create bureaucracy and cost, cost that will inevitably end up on shelf prices.”

Executives from Metro Inc. and Empire Co. Ltd. have said they will sign on to the code, but a spokesperson for Metro has said the expectation for that company will be for all major industry players to agree to it.