House committee calls for competition law reform in response to big grocers’ pandemic pay scandal

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The parliamentary committee that grilled Canada’s strongest grocery executives over their choices to concurrently lower pandemic pay bonuses for frontline workers is now calling on the federal government to strengthen its guidelines on wage fixing.

The Home of Commons trade committee on Wednesday tabled a report recommending that the federal authorities amend the Competitors Act so as to add wage fixing to the listing of behaviours that may be prosecuted as felony offences.

The report’s suggestions, if adopted, would develop the competitors watchdog’s powers to take a look at how corporations take care of their staff and suppliers, not simply their clients.

The trade committee has been following the pandemic pay controversy since final yr, when it summoned the heads of the highest grocery store chains — Loblaw Cos. Ltd., Sobeys’ mum or dad Empire Co. Ltd., and Metro Inc. — to clarify why they cancelled their respective $2-per-hour bonuses for frontline staff on the identical day in June 2020.

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At that listening to, Metro chief govt Eric La Flèche informed the committee that he referred to as the heads of Loblaw and Empire within the weeks main as much as the cancellations to ask once they deliberate to terminate the bonuses. Each Loblaw president Sarah Davis and Empire chief govt Michael Medline mentioned they didn’t reply La Flèche’s query. Medline mentioned he insisted on having authorized counsel on the decision.

“We function in a aggressive setting. We need to deal with our staff pretty and be seen to deal with our staff pretty,” La Flèche informed the committee final July. “The extra data I’ve on what others are doing, how they’re treating their staff and the way a lot they’re paying and for the way lengthy, is legitimate data that I attempted to get.”

Davis, in the meantime, despatched a “courtesy e mail” to tell her opponents of Loblaw’s choice to chop its pandemic pay, “recognizing that after telling 200,000 staff, the information can be public instantly.”

All three grocers have mentioned they didn’t coordinate their choices to chop the bonuses, and strongly denied any wrongdoing within the matter. Every firm has carried out different bonus programs within the later phases of the pandemic.

Competitors Bureau commissioner Matthew Boswell expressed concerns that the highest executives at rival grocery chains talked to one another earlier than cancelling the bonus applications. However he additionally informed the committee that wage fixing, no-poach pacts and different agreements between opponents that repair the price of enterprise inputs are usually not at the moment captured by the bureau’s “felony powers.”

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The bureau’s powers solely cowl cartel-like behaviours that repair client costs, not enter costs, attributable to a 2009 modification that exempted so-called “buy-side” agreements between opponents.

These agreements — aimed toward getting higher costs on inputs, corresponding to merchandise or labour — may be benign and even optimistic for shoppers. For instance, smaller producers can pool their shopping for energy to get a less expensive bulk worth from a provider.

The competitors bureau can nonetheless pursue buy-side agreements as civil circumstances once they cross the road, but it surely has to show that they’d a detrimental influence on market competitors, which Boswell has admitted is a high bar to meet.

The trade committee’s report — Wage fixing in Canada: And equity within the grocery sector — mentioned the legislation has a “important hole” on the subject of policing wage-fixing agreements.

The report really useful the federal authorities amend the Competitors Act to “prohibit cartel-like practices associated to the acquisition of products and companies, together with wage-fixing agreements” between opponents.

“Parliament ought to align Canadian competitors laws with American laws to criminally prosecute such agreements,” the report mentioned.

Ambarish Chandra, an affiliate professor on the College of Toronto who focuses on competitors and public coverage, mentioned Canada’s method to wage fixing is at the moment “out of the mainstream in comparison with different international locations,” together with the USA.

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Canada badly wants to ban wage fixing, which any economist will let you know is simply as unhealthy as worth fixing

Ambarish Chandra

“Canada badly wants to ban wage fixing, which any economist will let you know is simply as unhealthy as worth fixing,” he mentioned through e mail. “The truth that the grocery chains even thought-about discussing wages — not to mention truly mentioned them and seemingly all lower wages on the identical time — is unbelievable, and the federal government should make such practices unlawful.”

The committee’s report additionally really useful a funds improve for the historically underfunded Competitors Bureau and added its voice to calls for the federal government to determine a code of conduct that might rein in bully ways utilized by dominant gamers within the grocery trade.

Empire welcomed the report, saying it was happy the committee “precisely reported that Empire didn’t interact in any discussions with our opponents” about wages.

Spokesperson Jacquelin Weatherbee in a press release on Thursday morning mentioned the corporate not too long ago despatched a letter to the committee “to remind them that we don’t, below any circumstances, imagine in wage fixing — whether or not it’s legislated or not.”

Empire additionally informed the committee it might “welcome any clarification to the authorized regime round opponents partaking in wage fixing and we’re happy to learn their suggestion to that impact,” she mentioned.

A Metro spokesperson declined to touch upon the report. Loblaw didn’t instantly reply to a request for remark.

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