OTTAWA - The Competition Bureau of Canada has recently issued new guidance urging retailers and landlords to reconsider or eliminate competitor property controls that lack justification, even if such practices do not directly violate the Competition Act. This directive highlights concerns over how these controls can impede market entry and expansion for other firms.

Property controls, often found in commercial leases, can impose restrictions on the types of stores allowed to operate within a shopping center or dictate the types of businesses that can occupy a location after a tenant departs. The Bureau emphasizes that these controls can hinder competition, particularly in important sectors such as groceries.

In a grocery market study published in June 2023, the Bureau identified that property controls often limit the ability of new grocery chains to enter markets, ultimately denying consumers the advantages that come with competition. This finding has prompted the regulator to take action against specific instances of these controls.

Earlier this year, the Competition Bureau successfully negotiated with Empire Co. Ltd. to rescind a property control deemed to restrict grocery store competition in Crowsnest Pass, Alberta. This case exemplifies the Bureau's commitment to fostering an environment that encourages competition and benefits consumers.

The Bureau further notes that restrictive covenants are particularly problematic because they can bind the land itself, affecting future owners and potentially stifling competition for years to come. The organization's position is that such restrictions should only be considered justified under exceptional circumstances, asserting that they generally have detrimental effects on market dynamics.

By releasing this guidance, the Competition Bureau is making a clear statement on the importance of competitive practices among retailers and landlords. It strongly advocates for the removal of unjustified property controls that can limit market access for new entrants and reduce consumer choice.

As part of its ongoing efforts to ensure competitive integrity in the marketplace, the Competition Bureau encourages businesses to closely evaluate their use of property controls and to prioritize practices that foster competition rather than hinder it.

This proactive approach reflects the Bureau's mission to protect and promote fair competition for the benefit of consumers across Canada.