A new voluntary grocery code of conduct for the Canadian grocery industry is scheduled to be fully implemented on Thursday. The code aims to ensure fair practices between grocers and suppliers, particularly concerning penalties and fees, with the goal of enhancing transparency, fairness, and predictability in the sector.
Administered by the Office of the Grocery Sector Code of Conduct, the code encompasses provisions on trade rules, a governance framework, and a process for adjudication and dispute resolution. The five largest grocers in Canada – Empire, Loblaw, Metro, Walmart Canada, and Costco Canada – have officially enrolled in the code.
Effective January 1, the code will be fully operational, including a mechanism for resolving disputes and addressing violations. This will enable grocers, suppliers, and other stakeholders to lodge formal complaints. The Office of the Canada Grocery Code will also initiate the collection of annual membership fees and release yearly reports detailing industry trends, challenges, and proposed enhancements.
Although the code is designed to foster better relationships among industry players rather than reduce food prices, opinions vary among experts regarding its potential impact on consumers. The impetus for establishing the code stemmed from issues surrounding fees imposed on suppliers by major grocery retailers, exacerbated by years of high food inflation following the COVID-19 pandemic.
While the code does not regulate retail food prices, shelf arrangements, or commercial terms negotiation limits, it establishes clear guidelines for grocers and suppliers. Similar grocery codes exist in other countries like the U.K. and Australia.
Former Empire CEO Michael Medline advocated for the code to level the playing field for Canadian grocers and suppliers. The code is not a panacea for industry challenges but could lead to increased innovation, investment, and fewer supply chain disruptions, according to Karen Proud, president of the Office of the Grocery Sector Code of Conduct.
Opinions vary on the potential impact on prices, with some believing it could lead to lower prices, while others express concerns about potential price increases due to limitations on grocers’ demands from suppliers. Overall, the code is expected to have a positive influence on the industry, fostering better relationships and encouraging industry improvements.
