Competition Bureau drops investigation of Loblaws

The federal Competition Bureau has dropped a probe into allegations that Loblaws abused its dominant position in the Canadian grocery business by seeking compensation from suppliers when competition cut into its profitability.

Probe opened in 2014 after grocer accused of abusing its dominant position to pressure suppliers

The federal competition regulator has ended its three-year probe into Loblaws' dealings with its suppliers. (Aaron Vincent Elkaim/Canadian Press)

The federal Competition Bureau said Tuesday it has dropped an investigation into allegations that Loblaw Companies Ltd. abused its dominant position in the Canadian grocery business in its dealings with suppliers.

The Commissioner of Competition said the decision to end the case follows a three-year investigation conducted by the agency into claims that the company implemented and enforced a number of anti-competitive policies.

"Under its policies, Loblaw sought compensation from suppliers when its profitability decreased due to other retailers' competitive activities such as when they sold products at lower prices," the Competition Bureau said in a statement posted on its website.

"Loblaw put an end to several of these policies in January 2016, during the Bureau's investigation."

The regulator said that while a number of suppliers suggested that the policies influenced their dealings with other retailers, the allegations were not sufficiently supported by the evidence.

The bureau said it will take action if it receives additional information and concludes that any policies are in violation of the law.

"The line between hard bargaining and anti-competitive conduct is a fine one and firms should be careful not to cross it," competition commissioner John Pecman said in a release. 

Loblaws pleased

Loblaws said it welcomed news of the end of the probe.

"We are pleased with the conclusion that no further action is required at this time," Kevin Groh, the company's vice-president for corporate affairs, said in statement emailed to CBC News.

"We have been an open book and made significant contributions to the bureau's review,"  he said.

"We have used the process to better understand the bureau's concerns and observations, and have simplified the way we conduct our business with suppliers. We are continuing to introduce industry-leading compliance measures."

The discontinued investigation is separate from an ongoing criminal investigation into allegations of anti-competitive conduct in the industry.

Loblaws is among several Canadian grocery companies that in late October acknowledged an industry-wide investigation by the Competition Bureau into allegations of a price-fixing scheme involving certain packaged bread products. The bureau raided the offices of some companies in connection with its probe.

Higher profits

Also Tuesday, George Weston Ltd. said it plans to close an unprofitable frozen cake factory in the U.S. and move some of the work to a plant in Cobourg, Ont.

News of the move came as George Weston said it made a profit attributable to common shareholders of $420 million or $3.25 per diluted share in the third quarter ended Oct. 7, up from $254 million or $1.97 per diluted share a year ago.

 On an adjusted basis, George Weston says it earned $277 million, up from $266 million a year earlier.

The company said its earnings were boosted by its Loblaws business, offset partly by its Weston Foods operations.

Sales at George Weston totalled $14.65 billion, up from $14.61 billion.

With files from The Canadian Press