Walmart Canada says it’s getting rid of property controls relating to retail competition across the country.
The move comes as Canada’s competition watchdog is investigating the use of the restrictive real estate covenants, and as two major grocers have indicated they would be open to eliminating them.
The grocery industry’s use of property controls, which are terms baked into commercial leases that put restrictions on other tenants and their activities, has recently come under scrutiny.
Walmart said Friday it decided to “unilaterally waive any competitive retail restrictions” and is in the process of notifying its landlords and other landowners of the change.
The Competition Bureau is investigating the use of property controls by the parent companies of Loblaw and Sobeys, and has said they are hampering competition in the grocery sector.
Property controls are widely used not just in the grocery industry, but in retail and other sectors. These controls could be used to prevent another grocer from entering a shopping plaza, for example, or to prevent another retailer from selling certain items. They could also be used to limit the kinds of businesses that can take over a store location after a company leaves.
In October, Loblaw said it would eliminate its use of commercial property controls if other grocers did the same.
Property controls have been around for decades across industries with the intent to incentivize development, said Loblaw spokeswoman Catherine Thomas in a statement at the time.
“That said, in some circumstances, they might reduce options for customers.”
At the time, Sobeys owner Empire said it would like to see the government eliminate the use of the clauses across retail.
Walmart Canada spokeswoman Sarah Kennedy said the company made the decision “in light of recent changes in Canada.”
The company did not elaborate on the changes in question.
But recent amendments to the Competition Act have given the Bureau more tools at its disposal to protect and promote competition.
One of these amendments, which comes into force mid-December, allows the Bureau to take action against agreements or arrangements between two parties that seek to prevent or lessen competition. Before this amendment, the Bureau could only take action on such arrangements if they were between two competitors, meaning a grocer and its landlord would be exempt.
Deputy commissioner Anthony Durocher previously said property controls can be a barrier both for independent grocery stores and larger chains, as well as for foreign grocers looking to enter the Canadian market.
