Grocery chains promising more discounts, price freezes to stabilize food costs, minister says

The five largest grocery chains have delivered plans to stabilize food prices to the federal government, Industry Minister Franois-Philippe Champagne said Thursday.

Champagne met with the heads of Loblaw, Sobeys, Metro, Costco and Walmart in Ottawa last month. The minister told them the government wanted to see theirplans to stabilize prices by Thanksgiving.

The grocery chains are promisingmore discounts, price freezes and price-matching campaigns, Champagne said Thursday.

"These measures will bring a much needed [and] more competitive marketplace and the winners of that are obviously Canadians," he said, adding that Canadians should expect to see grocers start rolling out these plans "within days."

In August, the price of food purchased from stores increased by 6.9 per cent compared to last year. While that's still almost twice the overall inflation rate of 4 per cent, it's down from a recent highof more than 11 per cent.

The Competition Bureau reported in June that Canada's grocery sector lacks competition and is dominated by three domestic giants: Loblaw, Sobeys and Metro. It called on the government to encourage new market entrants to bring down prices.

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The federal government says Canada's five major grocery chains have delivered plans to stabilize food prices, promising more discounts, price freezes and price-matching campaigns.

Champagne was pushed by reporters to explain how he can be sure government pressureresulted in the actions grocers are now promising.

Metro told CBC News last year that annual price freeze campaigns between November and February are "industry practice."

In response, Champagne claimed the September meeting was the first time all five grocery CEOs had been brought together by the federal government in the same room.

"I think we've been a catalyst to bring [these actions] to the forefront," he said. "This is day one of a process What we have achieved would be a catalyst for more measures, faster measures and long lasting measures.

Opposition MPsquestion government, companies' promises

Champagne also said that the examples he gave were only part of the plans grocers have presented to him. He said he wouldn't reveal more details in order to ensure fair competition.

But opposition MPs said they'reskeptical about what the government and the grocers are promising.

"Do you believe any promises these guys make?" Conservative MP Scott Aitchison asked as he passed reporters on the way to Thursday's question period.

NDP MP Alexandre Boulerice whose party has been calling on the government to impose a windfall tax on grocery store profits said the government should go beyond asking grocery chains for commitments.

"A commitment to stabilize prices that are already too high is not enough," he said.

When the government initially called on the major grocers to help stabilize food prices, it said it would consider taking action, including tax measures, if the companies didn't cooperate.

Asked Thursday if he is satisfied with the plans that were presented to him, Champagne saidthat he sees this as an ongoing process.

Finance Minister Chrystia Freeland, who joined Champagne at his press conference, said tax measures are still an option.

"No tools are off the table, no measures are off the table," she said. "That very much included finance measures like tax measures. So that is for sure an option."

The government said last month it also plans on changing the Competition Act to give the bureau more power to take action. The legislative changes would include allowing the bureau to "compel the production of information to conduct effective and complete market studies," a government press release said.

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Michael von Massow, a food economist at the University of Guelph, says the federal government's efforts to get Canada's major grocers to stabilize their food prices won't make 'a substantive difference' in food prices, adding that supply-based issues are the major determining factor in influencing prices.

Champagne also said Thursday that the government is creating a new task force within the Office of Consumer Affairs to monitor and report on actions taken by the grocery chains.

The Retail Council of Canada, which represents Metro, Loblaw and Sobeys,said Thursday that the companies have had "good faith" conversations with the government in recent weeks. But it said the government needs to continue putting pressure on food manufacturers and producers to play a part in stabilizing prices.

"It therefore remains critical that all members of the complex supply chain address their respective roles in food pricing," a statement from the council said.

Champagne said that in addition to his meeting with grocery CEOs, he alsohas had discussions with producers and manufacturers in recent weeks.