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A group of industry associations, representing both retailers and food producers and manufacturers, is proposing a “code of practice” for the grocery sector – but opposes legislated regulation to govern the relationship between grocers and their product suppliers.

The two sides have clashed for years over the fees that retailers charge to suppliers, such as for shelf placement or in-store promotions. Stores also charge penalties to suppliers for late deliveries or shipments that are short on goods. Retailers have mostly resisted calls for regulation in the past.

On Thursday, the group acknowledged that the industry should develop a mandatory code that would include a dispute resolution process. The group comprises the Retail Council of Canada, Food and Beverage Canada, the Canadian Federation of Independent Grocers, Canadian Produce Marketing Association, The Quebec Food Processing Council, and Quebec Food Retailers Association.

Ottawa should work with provinces to develop code to regulate grocery industry, Commons committee says

Calls for regulation have intensified in recent months. In March, Sobeys owner Empire Co. Ltd. and Food, Health & Consumer Products of Canada, or FHCP, together proposed government regulation that would include the power to impose fines on companies that did not comply.

Earlier this month, a House of Commons committee recommended that the federal government work with the provinces to develop a code to regulate the industry.

But because agriculture and food fall under provincial jurisdiction, Retail Council president and chief executive officer Diane Brisebois said there is “great concern” that such regulation could impose different rules for different parts of the country.

“It becomes a real compliance nightmare,” Ms. Brisebois said. “This would just be additional red tape, and increase cost and complexity.”

Industry tensions flared again last year, after major grocers such as Walmart Canada and Loblaw Cos. Ltd. informed suppliers of fee increases that would offset the retailers’ investments in improvements to stores and to e-commerce systems. Federal Agriculture and Agri-Food Minister Marie-Claude Bibeau called such fees “worrying.”

Late last year, Ms. Bibeau and the provincial and territorial agriculture ministers formed a working group to examine the issue. That group is preparing to make its own recommendations in a report to be issued by July.

In the proposal issued on Thursday, the group suggested that industry representatives should work with the ministers to design a single code that would apply across Canada, and determine how it would be enforced, by the end of next year.

While the proposal differs from the one presented by Sobeys and FHCP, both groups are seeking to address issues such as “unilateral” fees, and transparency and certainty in contracts. Thursday’s proposal also called out the need for support for small and medium-sized businesses to ensure fair dealing in contracts where there is a “disparity in negotiating power.”

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