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Ban on property controls barring stores from opening near other grocers won’t impact affordability: economist
Six months after passing a law aimed at making it easier for new grocery stores to open, Manitoba’s premier says lower grocery bills could be on the horizon.
“We could be the first province in Canada that actually has real competition in the grocery sector and people don’t even know,” says Premier Wab Kinew.
A law given royal assent in the province this June bans new real estate deals signed by grocery stores and supermarkets that prevent similar stores from opening nearby.
The targeted property controls — known as restrictive covenants and exclusivity clauses — are common across Canada and raise “serious competition concerns”.
Existing deals can continue if they were registered with the province within 180 days from the law’s passing. The province said 46 were registered by Monday’s deadline, while 20 others that could have been registered were abandoned by grocers.
But the new law permits the province to challenge any of the registered deals and refer the matter for a hearing to the Municipal Board if they find the deal is against the public interest.
Mike von Massow, professor at the University of Guelph’s department of food, agricultural and resource economics, says big box stores generally avoid being close to one another, and that these types of property controls usually apply to a small area.
The law, he says, may allow independent grocers and other small-footprint retailers to set up shop in some areas, but that he doesn’t expect any impact on food prices.
The deals are “largely about restricting those smaller competitors,” von Massow said. “And really only a small number of [them] will actually be price-competitive.”
The Competition Bureau’s guidance said that property controls may actually increase competition in some circumstances, including by encouraging companies to enter a market.
Von Massow said the deals may, for example, entice stores to come to smaller communities where there are fewer people who can buy their goods, by assuring them they won’t have to compete with a business setting up right next door.
Even so, he said getting rid of property controls is “good optics” for Manitoba’s government.
Kinew said the law may “not be a silver bullet” but it’s one more thing the government can do to push for affordability.
