Loblaw says it will support the grocery code of conduct. Here's what you need to know

loblaw says it will support the grocery code of conduct. here's what you need to know

Loblaw Cos. Ltd. said it’s ready to sign on to the grocery code of conduct, a major milestone for an agreement several years in the making. People shop at a Loblaws store in Toronto on Thursday, May 3, 2018. THE CANADIAN PRESS/Nathan Denette

Loblaw Cos. Ltd. said it’s ready to sign on to the grocery code of conduct, a major milestone for an agreement several years in the making.

Here’s what you need to know about the code.

What is the grocery code of conduct?

The grocery code of conduct is a voluntary, industry-led document meant to provide guidelines for fair dealings between grocery retailers and their suppliers.

Proponents of the code say it will level the playing field for suppliers as well as for smaller grocery retailers.

Why is it a big deal that Loblaw has agreed to the code?

Last December, Loblaw and Walmart Canada said they wouldn’t sign the code as drafted over concerns it would raise prices for Canadians at the grocery store.

In the months following, calls grew for the code to become law instead. A House of Commons committee studying food prices told the two grocers that if they didn’t agree to the code, the committee would recommend that the code be made mandatory.

Loblaw said the new version of the code includes clearer language that it now feels is fair and won’t lead to higher prices.

Who else is on board?

Walmart Canada says it’s received a copy of the new drafted code and will be reviewing it.

Metro and Empire, the other two major Canadian grocers, have already committed to the code, though both have said it needs the participation of all major players in order to work.

Michael Graydon, the chairman of the interim board for the code, said Costco has had "some inquiries around certain aspects" of the code, but he hopes it will also agree to participate.

Costco didn’t respond to a request for comment.

In February, Costco’s chief operating officer of Costco Wholesale Corp.’s international and Canadian division Pierre Riel told the House of Commons committee that if the code is well-defined and its principles are consistent with the wholesaler’s own principles, it will sign on. But at that time, Riel said Costco didn’t have enough detail on how the code would work.

Is this related to the boycott?

Some Canadians have chosen to boycott all Loblaw-owned stores during the month of May in a movement that began on Reddit. Among the group's demands was a call for Loblaw to agree to the grocery code of conduct.

Loblaw president and CEO Per Bank says discussions over the code far pre-date the boycott, so the announcement that the grocer is agreeing to the code "has nothing to do with their demands."

Bank recently met with Emily Johnson, one of the boycott’s organizers, to discuss several things including the grocery code. He said he’s sure Johnson will be happy to hear that Loblaw is on board with the code of conduct.

Will this affect food prices?

Work on the code began before food inflation started to take off in Canada, and it wasn't pitched as something that would affect retail prices. But in recent months, with customers feeling the pinch of food inflation and increasing pressure on politicians to do something about it, talk of the code has become intertwined with the issue of grocery prices.

Though Loblaw previously said it thought the code could raise grocery prices by more than a billion dollars, proponents of the code pushed back, even suggesting it could do the opposite.

In April, Empire Co. Ltd. chief executive Michael Medline said he wouldn't have supported the code if he thought it would put upward pressure on prices.

He said he hopes the code could lead to lower prices in the future, but said it’s not a panacea “for all the issues that drive up prices.”

Now, after months of discussions, Loblaw's concerns about the grocery code have been eased, Bank said.

"The code now is fair, and it will not lead to higher prices," he said on Thursday.

This report by The Canadian Press was first published May 16, 2024.

Companies in this story: (TSX:L)

Rosa Saba, The Canadian Press

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