Empire Backs Away From a Controversial Practice
One of Canada's biggest grocery players is changing how it does business with land. Empire Company, the parent company behind Sobeys, Safeway, FreshCo and other grocery banners, has announced it will move away from using restrictive covenants — legal clauses attached to property sales or leases that prevent competitors from opening a grocery store on that land for years, sometimes decades, afterward.
The practice has been used across the country by major grocery chains, including Loblaw and Metro, and has drawn increasing scrutiny from federal regulators and politicians who argue it locks out smaller, independent grocers and keeps prices higher by limiting competition in local markets.
Why It Matters for Canadian Shoppers
Restrictive covenants might sound like a niche real estate detail, but they've had an outsized effect on where Canadians can shop for groceries. When a big chain sells or leases a property with one of these clauses attached, it can effectively block a rival grocer — whether that's a large competitor or a local independent — from ever opening in that spot, even if the original store closes down.
The federal Competition Bureau has flagged these covenants as a barrier to competition in its ongoing review of Canada's grocery industry, which has faced intense criticism over food price increases in recent years. Empire's decision to move away from the practice follows pressure from that review, as well as broader public frustration with the dominance of a handful of major players — Loblaw, Sobeys and Metro together control the vast majority of grocery sales nationwide.
What Empire Says Will Change
Empire has indicated it will stop entering into new restrictive covenants going forward and says it's reviewing how to handle existing agreements already in place across its network of stores. The company operates thousands of locations under banners including Sobeys, Safeway, FreshCo, Foodland, IGA and Farm Boy, making the shift one that could ripple across communities nationwide over time.
While the announcement doesn't undo existing covenants overnight, it signals a shift in how at least one of the country's grocery giants is responding to political and regulatory pressure to open up the market. Advocates for grocery competition have long argued that easing these restrictions could pave the way for more independent grocers, ethnic supermarkets and discount chains to move into neighbourhoods previously locked out.
The Bigger Picture
Grocery affordability has remained one of the most persistent economic concerns for Canadians, with committees in Ottawa having called grocery executives to testify about pricing practices in recent years. Any move that chips away at barriers to competition is likely to be watched closely by regulators, competitors and consumers alike, as Canadians continue to look for relief at the checkout.
Empire has not provided a specific timeline for phasing out existing covenants, but the announcement marks one of the more concrete responses yet from a major Canadian grocer to competition concerns raised at the federal level.
Source: CBC News
