In Canada, the Global News reports that a code of conduct being crafted by the government to regulate the fees that large grocery retailers charge suppliers is being protested by Loblaw, which argues that the code could “raise food prices for Canadians by more than $1 billion.”
According to the story, “The grocer cannot endorse the code in its current form, wrote chief financial officer Richard Dufresne in the letter, requesting a special meeting of the industry sub-committee to address Loblaw’s concerns.
“In a statement, Loblaw spokeswoman Catherine Thomas said the draft code has ‘a number of challenges,’ which the grocer believes could risk product availability and increasing food prices.”
Global News writes that “Loblaw isn’t the only grocer to express concern about the code. Walmart Canada spokeswoman Sarah Kennedy said in an email in late October that the company supports initiatives benefitting customers but it’s ‘conscious of adding unnecessary burdens that could increase the cost of food for Canadians, especially during inflationary times’.”
The story says that “Michael Graydon, CEO of the Food, Health & Consumer Products of Canada association and co-chair of the steering committee developing the code, urged the two companies to give the code a chance. Without them on board, the code will be less effective, he said.
“‘Sign on, be active participants, be engaged,’ Graydon said, noting the code will be reviewed after its launch. ‘But to just continue to sit on the sidelines and throw rocks at the process … it’s not in the best interest of the industry’.”
KC’s View:
The notion that the elimination or reduction of certain fees could cost shoppers money doesn’t sound like a reach – there are a lot of retailers out there that make money on the buy, not the sell. Their profits often come from the fees they charge, rather than the margins generated by actual sales. (One can argue about whether this is good for consumers, since retailers then are being incentivized to carry the products with the highest fees, as opposed to products from smaller vendors that cannot afford to pay to play.)
As I understand it, the rules suggested by the code won’t become regulations – meaning that they won’t just be suggestions anymore – unless there is such resistance from the industry that they are ineffectual. So companies like Loblaw and Walmart have decisions to make – go along, or risk greater regulation.
Think of it as a Hobson’s Choice.
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