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A House of Commons committee that has been looking into pay practices in Canada’s grocery sector is recommending that the federal government toughen enforcement against wage-fixing among industry competitors.

The standing committee on industry, science and technology tabled its report nearly a year after it summoned Canada’s top grocery executives to explain their decisions to cut COVID-19 pay premiums for workers, all around the same time. The report released on Wednesday recommended Parliament should amend the Competition Act to allow for criminal prosecution on wage-fixing.

Loblaw Cos. Ltd. and Metro Inc. both announced their decisions on the same day in June, 2020, and Sobeys parent Empire Co. Ltd. made its announcement the following day. Walmart Canada announced the end of its pay premiums in late May of that year.

At the hearings last July, executives from Loblaw, Metro and Empire told the committee that the extra pay was always meant to be temporary. Executives from Metro and Loblaw also said they had communicated by e-mail with competitors about their decisions to end the premiums, but all said that they had made their decisions independently and did not co-ordinate with each other.

Commissioner of Competition Matthew Boswell also appeared before the committee, and said that such communication about wages “risks a slippery slope towards cartel-like conduct,” according to the report. Mr. Boswell told the committee that the Competition Act does not cover agreements around wage-fixing.

The committee’s report called this “a significant gap in the Competition Act,” and recommended that Parliament should amend the act to prohibit wage-fixing agreements. It also recommended that the government should provide more resources to the Competition Bureau to enforce the act.

“As suggested by the Commissioner of Competition, Parliament should align Canadian competition legislation with American legislation to criminally prosecute such agreements,” the report stated.

Since the grocers announced those cuts to extra pandemic pay last year, the companies have periodically reinstated pay premiums for some front-line staff, as Canadians have continued to face lockdowns to combat subsequent waves of COVID-19. But private-sector union Unifor recently criticized both Loblaw and Metro for paying out one-time bonuses rather than reinstating hourly premiums. Sobeys reinstated premiums for some workers temporarily, as long as stay-at-home orders were in effect in their provinces.

Metro declined to comment on the committee’s report on Thursday. A Loblaw representative did not respond to a request for comment.

“We were pleased to see that the [standing] committee accurately reported that Empire did not engage in any discussions with our competitors about employee wages,” Empire spokeswoman Jacquelin Weatherbee said in an e-mailed statement. “We recently sent the [standing] committee a letter to remind them that we do not, under any circumstances, believe in wage-fixing — whether it’s legislated or not. We also stated that we would welcome any clarification to the legal regime around competitors engaging in wage-fixing and we are pleased to read their recommendation to that effect.”

The committee’s report also recommended that the government support the provinces and territories in developing a code of conduct for the grocery sector – echoing an earlier recommendation from the standing committee on agriculture and agri-food. Momentum has been building over the past year for some type of code to govern agreements between grocery retailers and their suppliers.

Tensions have flared for many years over the fees that retailers charge to suppliers to stock their products. Stores charge fees for things such as shelf placement and promotions, and also charge suppliers penalties for deliveries that are late or differ from the quantities that retailers ordered. While retailers have mostly resisted calls for regulation in the past, some such as Empire and industry groups such as the Retail Council of Canada have more recently signalled they are open to a code. Some still differ on whether the code should be legislated by government, however.

“Parliament has legislative power to regulate relationships between these actors, but only within specific areas of jurisdiction,” the report noted. It recommended that the federal government take a “leadership and support role” in regulating the sector, such as hosting a first ministers’ meeting on the subject.

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