The revelation that Loblaw will end its 50 per cent discount on perishable foods like meat, fruit and vegetables as they near their best-before dates should attract the attention of Canada’s Competition Bureau, says one industry expert.
Prof. Sylvain Charlebois, the director of Dalhousie University’s Agri-food Analytics Lab, believes the action taken by the grocery chain to align its policy with other food retailers might be considered anti-competitive behaviour.
In an email to Charlebois Monday, Loblaw spokesperson Catherine Thomas said the company is moving away from offering a range of discounts between 30 and 50 per cent on “serve-tonight” products and toward “a more predictable and consistent offering, including more consistency with our competitors.”
“If this is not collusion, it certainly appears to be very close to it,” Charlebois wrote in a column for the Toronto Sun, describing the practice as “discount fixing.”
While such a move to scrap the popular discount may anger some consumers, some experts say there’s nothing to suggest it runs afoul of competition laws.
Loblaws will no longer offer 50% discount on expiring food
Loblaw-owned grocery stores will lower the discount on perishable foods like meat, fruit, and vegetables near their expiration date from 50 to 30 per cent.
‘Conscious parallelism’
Instead, what Loblaw appears to be doing is known as “conscious parallelism” — the ability of competitors to watch what others are doing in order to copy them, according to Jennifer Quaid, an associate professor of law who specializes in competition and business regulation at the University of Ottawa.
“It’s not illegal,” she said. “The fact that you watch what’s going on in the market and you copy your competitors is not a criminal collaboration because there’s no decision to get together and do something.”
Until recently, Loblaw Cos. Ltd. — which owns grocery brands including Loblaws, No Frills, Zehrs and Valu-Mart — offered last-day discounts of up to 50 per cent on items nearing their best-before dates. But now, discounts on perishable goods will range between 30 to 50 per cent.
The CBC’s Preston Mulligan spoke to people in Nova Scotia on Loblaws’s decision to reduce the markdowns on food that’s about to expire.
It’s a move that has angered some, in particular vulnerable Canadians who have come to rely on the 50 per cent discount.
Chalebois says that in the free market, Canadians expect grocers to remain innovative and creative when it comes to discounting.
“When you have this attitude, saying that ‘We’re just doing this because we’re aligning our policy with our competition,’ that’s not a free market,” he told CBC News in an interview.
“Loblaws can do whatever it wants with its discounting policy. When the motive is about copycatting, like being a copycat to the competition, that’s not on. I think people are expecting something different.”
Section 45 of the Competition Act makes it illegal for competitors to conspire, agree or arrange to “fix, maintain, increase or control the price for the supply of the product.”
If the grocery retailers got together and all agreed to remove a discount, that probably would be a form or price fixing, Quaid said.
“But there doesn’t appear to be any evidence of that,” she said, noting there doesn’t seem to be anything happening that would necessitate an investigation by the Competition Bureau, the federal agency that is mandated to boost fair competition.
Competition Bureau involvement not needed, expert says
Ambarish Chandra, an associate professor of economics at the University of Toronto’s Rotman School of Management, says he doesn’t believe Loblaw was engaging in anti-competitive practices by removing the discount and says it shouldn’t require the Competition Bureau to get involved.
“This is way down the list,” said Chandra, who has spoken critically of Canada’s grocery industry. “They’re not going to do it, nor should they, given the other pressing issues that they should be focusing on.”
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In an email to CBC News, Emmanuel Morin, a spokesperson for the Competition Bureau of Canada, said the organization was aware of the Loblaw announcement regarding its discount, but that it would be “inappropriate to comment or provide opinions on specific conduct in the marketplace.”
Quaid said people need to remember that companies exist to make profits.
“We may wish they made other choices,” she said, but noted that if people are to trust in the market and don’t want too much government interference in business, then they have to be careful about when they decide they don’t like the choices businesses are making.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
