Class-action lawsuit alleges northern grocer pocketed ‘millions’ from subsidy intended to lower food prices

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This article was published 19/02/2025 (235 days ago), so information in it may no longer be current.

The company with a grocery monopoly in many northern communities is being accused of profiting from millions of dollars in federal food subsidies intended to lower food prices for remote residents.

In documents filed in Manitoba Court of King’s Bench last week, lawyers for three current and former Nunavut residents are asking the courts to certify a class-action suit against the North West Company for allegedly keeping a portion of the money it received via Nutrition North Canada, instead of using it to reduce the price of groceries.

The lawsuit is seeking damages for breach of contract, punitive damages and an order directing the company to pay back all of the subsidy money in restitution to northern residents who shop at the stores.

“Despite making representations that it complies with the requirement to pass through the entire subsidy to consumer, and despite making a commitment to do so as (a) condition of receiving the subsidy, the (North West Company) has instead unlawfully retained millions of dollars of funding received through the program,” the lawsuit alleges.

“This class proceeding is brought on behalf of northern residents to require (the North West Company) to return these misappropriated funds to their intended beneficiaries.”

The lawsuit claims that because the full subsidy wasn’t used to reduce grocery prices, there were “poorer health outcomes in some of Canada’s most vulnerable and impoverished communities” as well as “increased rates of malnutrition, obesity, cardiovascular disease, diabetes and other morbidities associated with unhealthy diets, as well as increased rates of depression and suicidal ideation.”

North West Company representatives could not be reached for comment Tuesday.

The company’s roots go back to the fur trade and the Hudson’s Bay Company.

According to the company’s website, a group of investors, including hundreds of employees, bought the HBC’s Northern Stores Division in 1987 and three years later renamed its outlets under the Northern retail banner.

The stores are usually about 7,500 square feet in size and operate in communities of between 500 and 7,000 residents. Some have been in operation for more than three centuries.

Since the federal government began the program in 2011 with the goal of reducing the cost of healthy foods, it has paid out more than $1.2 billion in subsidies.

The lawsuit alleges the North West Company itself received more than $163 million between 2018 and 2021.

It also alleges the company misrepresented the savings received by northern residents when it put up posters in stores saying, “Making Healthy Choices More Affordable!” and when it put two price tags on goods — one of which was lower — “implying that the full subsidy has been passed along to consumers.”

For years, northern residents have complained about high prices and that retailers weren’t passing on the full subsidy to them.

Last year, then northern affairs minister Dan Vandal asked for an external review of the subsidy program.

No statement of defence has been filed and the matter has not been adjudicated in court.

kevin.rollason@freepress.mb.ca