Kevin Carmichael: How Canada's grocery oligopoly dulled competition — and fuelled inflation — via financialpost
Canadian headline inflation
Missing from that tweet was Loblaw’s profit on a $100 cosmetics bill, or its margin on drugs and health services. The company, like its two smaller counterparts in the grocery oligopoly, Empire Co. Ltd. and Metro Inc., bulked up over the years to take advantage of economies of scale and diversification.
Loblaw, Empire and Metro had margins big enough to absorb some of the price increases caused by an extraordinary period in history, but they chose not to sacrifice any of that cushion, probably because they felt no competitive pressure to do so. Those three companies, along with the Canadian operations of Walmart Inc. and Costco Wholesale Corp., control about 80 per cent of the market., Metro’s chief financial officer, told the agriculture committee on Feb. 6.
Back in the spring of 2021, when many economists and policymakers thought the sudden burst of inflation would burn itself out in a matter of months, there was a notion that bigger companies would use their market power to absorb some of the upward cost pressures in order to either gain or protect market share. That didn’t happen in Canada.
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