A new grocery code of conduct for retailers, suppliers, wholesalers, and primary producers in Canada is scheduled to be fully implemented on Thursday. The purpose of this code is to ensure fair practices between grocers and their suppliers, particularly regarding penalties and fees. The initiative aims to enhance transparency, fairness, and predictability within the industry.
Administered by the Office of the Grocery Sector Code of Conduct, the code encompasses trade regulations, a governance structure, and a process for resolving disputes. The five major grocers in Canada—Empire, Loblaw, Metro, Walmart Canada, and Costco Canada—have officially enrolled in the program.
Effective January 1, the code will be in full operation, including a mechanism for resolving disputes and addressing violations. This will allow grocers, suppliers, and other stakeholders to lodge formal complaints. The Office of the Canada Grocery Code will also begin collecting annual membership fees and publishing reports on industry trends, challenges, and proposed enhancements.
Despite the code’s aim to foster better relationships among industry participants rather than decrease food prices, experts have differing views on its potential impact on consumers. The code’s establishment followed controversies over fees imposed on suppliers by large grocery chains, which intensified in 2020 amid rising food costs due to the COVID-19 crisis.
While some grocers initially hesitated to endorse the code, government pressure prompted their compliance. The code outlines specific guidelines for grocers and suppliers, including rules on fees and dispute resolution procedures. Although this is the first code of its kind in Canada, other countries like the U.K. and Australia already have similar regulations in place.
Former Empire CEO Michael Medline championed the code as a means to balance the playing field for Canadian grocers and suppliers, suggesting it could lead to price reductions, shorter supply chains, and increased consumer choices. However, the code does not regulate retail prices, shelf placement, or commercial negotiations. Consumers may witness industry innovations and investments as well as improved supply chain efficiency as a result.
Gary Sands of the Canadian Federation of Independent Grocers believes the code will positively affect prices, citing examples from other countries where grocery codes led to price reductions. On the contrary, food economist Michael Von Massow warns that restricting grocers’ demands from suppliers could potentially drive prices higher.