Loblaws Removes Property Controls: What It Means for Grocery Prices in Canada

In a significant move that could transform Canada’s grocery industry, Loblaws has announced it will remove restrictive property controls. This decision, praised as a win for consumer choice and market fairness, comes in response to an investigation by the Competition Bureau. It is expected to encourage more competition in the grocery sector, potentially lowering prices and giving Canadians more shopping options.

What Are Property Controls?

Property controls, such as exclusivity clauses and restrictive covenants, are often found in commercial lease agreements. These clauses prevent landlords from leasing spaces to competing grocery stores, effectively reducing competition in certain areas. By eliminating these controls, Loblaws is opening the door for more grocers to enter local markets, particularly in areas that were previously limited by these restrictions.

For example, restrictive covenants could prevent the operation of another grocery store in close proximity to a Loblaws or Sobeys location, even if a spot had become vacant. This has hindered competition and contributed to higher grocery prices, according to a 2023 Competition Bureau study.

The Impact on Canadian Shoppers

Grocery prices continue to strain household budgets across Canada. This policy shift is seen as a step toward lowering food costs. According to Canada’s Food Price Report 2024, the average family of four will spend $16,297 on groceries in 2024, a 2.5% increase from last year. By allowing more competitors to enter the market, Loblaws’ move could result in:

• Lower grocery prices due to increased competition.
  
• More choice for consumers, particularly in areas where grocery options were previously limited.
  
• Better access to fresh food, especially in underserved or high-demand areas.
  

By removing barriers to entry for independent and discount grocers, this shift could help Canadian families save on their grocery bills while promoting a healthier, more dynamic grocery market.

Loblaws’ Commitment and Future Impact

Loblaws, the parent company of brands like Shoppers Drug Mart, Real Canadian Superstore, and No Frills, has committed to:

• Eliminating existing restrictive covenants and notifying landowners that they will no longer enforce these restrictions.
  
• Not entering into new exclusivity clauses that could limit competition.
  
• Waiving all exclusivity clauses in areas where Loblaws is the only grocery store, including in Halifax Regional Municipality and other locations across Canada.
  
• Ensuring that Shoppers Drug Mart will no longer include restrictions on food sales in its new leases, effective November 2024.
  

This change is expected to increase competition in the grocery market, allowing smaller and independent stores to better compete with the larger chains. In turn, this could reduce the price pressures that have been affecting Canadian shoppers in recent years.

Investor Perspective: Mixed Reactions

From an investor standpoint, Loblaws’ decision may have mixed consequences. While increased competition could impact the company’s market share and pressure profit margins, it may also enhance its public image. By aligning with regulators and improving the competitive landscape, Loblaws is likely reducing the risk of legal challenges and reputational damage. This could boost long-term investor confidence, particularly during a time when grocery prices and corporate practices are under close scrutiny.

The move could also signal a broader shift in the industry, as Sobeys parent company Empire Company Ltd. has already removed a similar property control in Alberta following legal pressure.

How do you think the removal of property controls will affect grocery prices in your area? Will it lead to more affordable options for shoppers?

More…

• https://money.ca/investing/loblaws-lower-grocery-prices
• https://www.blogto.com/eat_drink/2025/06/loblaws-change-anticompetitive-conduct-grocery-prices
• https://www.canada.ca/en/competition-bureau/news/2025/06/competition-bureau-monitors-loblaws-commitment-to-end-property-controls.html