Province takes aim at Sobeys over competition-killing property controls

The Manitoba government has Sobeys in its crosshairs as it looks to end anti-competitive zones around grocery stores and offer consumers more choice.

Public Service Delivery Minister Mintu Sandhu has flagged 43 property controls — restrictive legal covenants and exclusivity clauses that prevent competitors from locating nearby — registered by Sobeys Capital Inc., in a letter to the supermarket giant.

Sobeys is, Sandhu said, the last supermarket chain operating in the province holding property controls.

Legislation enacted last June voids any new restrictions. Existing, registered controls can be removed after a review by the Municipal Board if deemed to be against the public interest.

Such controls prohibit direct competitors — other grocery stores, pharmacies or gas stations — from opening shop nearby. The goal is to increase competition and lower prices at the cash register.

Sandhu, the MLA for The Maples, said his office plans to challenge Sobeys’ controls. He offered to meet with Pierre St-Laurent, the CEO of Empire, in a letter dated March 10. Sobeys Inc. is a wholly owned subsidiary of Empire.

“I want to see more competition in Manitoba,” Sandhu told reporters Thursday, adding he hadn’t received a response to the letter sent a day earlier.

Sobeys didn’t respond to a request for comment Thursday.

The company has registered 43 controls, affecting 25 locations across Manitoba, Sandhu’s letter says. Buildings in Winnipeg, Birds Hill, Steinbach, Portage la Prairie and Altona are on the government’s radar.

Buffer zones surround Sobeys, Safeway, FreshCo, IGA locations and Sobeys’s distribution centre, a list provided by the provincial government states.

At least two of the locations don’t have an operational store, according to the list.

Twenty-three property controls held by other businesses have been relinquished since the legislation went into force.

Sylvain Charlebois, Dalhousie University’s director of the Agri-Food Analytics Lab, said the province shouldn’t point the finger only at Sobeys.

“I would certainly caution the province in just dismissing other grocers not doing it,” he said. “I would look at… the entire industry overall.”

He said grocers who locate in a mall may make agreements with landlords to be the only store of their kind, and businesses might strike similar arrangements with municipalities that don’t leave paper trails.

Still, he expects property control removal will help with affordability and competition, especially in rural areas.

Manitoba is the first province to ban the covenants.

“I think other provinces should follow suit,” Charlebois said, adding Quebec is eyeing similar changes.

The Canadian Federation of Independent Grocers raised concerns with Ottawa in 2023 about property controls constraining competition.

Even so, some covenants may be reasonable, said a spokesman for the association.

“If I am an independent grocer and I invest everything I have to open a grocery store in a plaza, is it reasonable for me to request the landlord that they not allow another grocery store in the (same) plaza?” Gary Sands said in a statement.

“We think that it is reasonable to say yes.”

CFIG has flagged the issue of anti-competitive buffer zones to the Competition Bureau.

gabrielle.piche@winnipegfreepress.com