Fairness in Business Practices

For months, a committee of leaders in the grocery industry have been meeting to develop a code of conduct to ease relations between Canadian grocers and their suppliers. The Agricultural Minister of Quebec, André Lamontagne, has suggested that if they cannot find a voluntary agreement, the government might have to impose one.

This issue was brought into sharp relief last week when Frito Lay, a Pepsico subsidiary, suspended shipping of orders to Loblaws when the grocery chain would not accept higher prices. Suppliers to the few Canadian chains who control most of the grocery market had been complaining about the power imbalance for years, but the pandemic intensified the disagreement as supplier costs rose.

The refusal to ship is regarded as one of the few tools suppliers have to resist the mandates of Canadian grocery giants. That is why the work of the committee is so important. They are trying to establish their own version of the UK's Grocery Supply Code of Practice. But even this may have limitations, as price levels are usually left to be settled by the markets, not by rules or committees.

What the code may do is establish a mechanism for negotiating, with arbitrators available to settle disputes. With more food inflation on the way, making peace between suppliers and retailers may be a key to keeping what they both need - customers.