A new voluntary grocery code of conduct is scheduled to be fully implemented in Canada on Thursday. The aim of this code is to ensure fair interactions between grocers and their suppliers, particularly concerning penalties and fees. It was established to enhance transparency, equity, and predictability within the industry.
Administered by the Office of the Grocery Sector Code of Conduct, the code comprises trade rule provisions, a governance structure, and a process for resolving disputes. The five largest grocers in Canada, including Empire, Loblaw, Metro, Walmart Canada, and Costco Canada, have officially enrolled in the program.
Starting January 1, the code will be in full effect, encompassing the dispute resolution process for addressing complaints and the repercussions for code violations. Stakeholders such as grocers, suppliers, and others will now have the opportunity to lodge formal complaints. The Canada Grocery Code website also mentions that the office will commence collecting annual membership fees and issuing yearly reports that outline industry trends, systemic issues, and proposed enhancements.
Although the code’s primary goal is to enhance relationships among industry participants rather than lower food prices, experts have differing viewpoints on its potential impact on consumers. The initiative was prompted by the imposition of contentious fees on suppliers by major grocery retailers, a concern that escalated in 2020 due to prolonged high food inflation following the COVID-19 crisis.
While some grocers initially hesitated to join, pressure from the federal government led them to reconsider. The code establishes precise regulations and guidelines for grocers and suppliers, covering areas such as fees and dispute resolution procedures. While this marks a significant step for Canada, other countries like the U.K. and Australia already have their own grocery codes.
Former Empire CEO Michael Medline advocated for the code to level the playing field for Canadian grocers and suppliers. While the code may not directly impact retail prices, it is expected to foster innovation and investment in the industry and reduce supply chain gaps. Views on the potential effects on prices vary, with some experts believing it could lead to lower prices, while others anticipate possible price increases due to restrictions on grocers’ demands from suppliers.