Canada’s competition watchdog is asking a federal judge to force Sobeys’ parent company to disclose confidential lease agreements and real estate holdings as part of an investigation into allegations the grocery giant has used restrictive property deals to block competitors.Blacklock's Reporter says court filings show the Competition Bureau is seeking records from Empire Company Ltd., accusing the retailer of using real estate agreements that may limit competition in dozens of communities across the country.“Empire Company Ltd. has engaged, and is engaging, in anti-competitive conduct by controlling available real estate through the use of property controls,” bureau lawyers wrote in a Federal Court application.The bureau is seeking information related to leases and property holdings in 51 local markets spanning Alberta, Ontario, Quebec, New Brunswick, Nova Scotia, and Newfoundland and Labrador.Empire operates roughly 1,300 grocery stores under banners including Sobeys, Farm Boy, Safeway, IGA, Foodland and FreshCo. The company also owns commercial real estate subsidiary ECL Developments Ltd. and holds a 41.5% stake in Crombie Real Estate Investment Trust, which controls approximately 300 properties nationwide.Federal lawyers argued Empire occupies a dominant position in numerous markets.“In certain areas of Canada, a grocery store owned by or affiliated with Empire is either the only seller or one of a small number of sellers of full-line grocery products,” court documents state..According to an affidavit filed by Competition Bureau counsel Luc Zara, investigators have spent two years examining whether Empire’s use of restrictive property clauses has prevented rival grocers from opening stores near existing Empire locations.“Based on information obtained by the Competition Bureau, real estate that is suitable and commercially attractive for grocery stores appears limited in various areas of Canada,” Zara wrote.“Property controls are one factor that significantly impacts the availability of suitable real estate in particular geographic areas.”The investigation comes amid growing scrutiny of competition in Canada’s grocery sector.Walmart Canada announced in 2024 it would stop using restrictive property controls. Loblaw Companies followed suit in 2025.“We welcome competition,” Loblaw said at the time.The Competition Bureau has faced criticism for approving decades of mergers that left much of Canada’s grocery market concentrated in the hands of three dominant players: Loblaw, Metro and Empire.Bloc Québécois MP Yves Perron sharply criticized the Bureau during a 2024 Commons agriculture committee hearing.“It really grinds my gears,” Perron said.“I am looking at the history of mergers in the grocery industry.”“Even as a citizen, not even as an MP, I can’t help myself. What were you doing in the 1990s, the 2000s, 2007, 2017 and so on? There were transactions all through this period. We had 13 Canadian grocery chains and now there are three.”.Over the past three decades, the bureau approved numerous major transactions that reshaped the industry, including A&P’s acquisition of Ultra Mart and Miracle Food Mart stores in 1990, Metro’s purchase of Dominion and Food Basics stores in 2005, Sobeys’ acquisition of IGA stores in 1998, and Loblaw’s takeover of Quebec-based Provigo the same year.The regulator also approved Sobeys’ purchase of Western Canada Safeway stores in 2013, Loblaw’s acquisition of 2,738 Shoppers Drug Mart locations in 2014, and Sobeys’ takeover of Ontario-based Farm Boy in 2018.In a 2023 report titled Grocery Competition, the Competition Bureau acknowledged criticism that its merger reviews contributed to consolidation in the sector.“Critics would note the bureau’s focus on local grocery competition has allowed for a slow reduction in the number of grocers across Canada as the industry has consolidated,” the report stated.“There is some truth to that.”
