Information call for Canadian grocery retailers – Lease exclusivity rights and owned lands restrictive covenants
Many leases contain clauses that give a tenant the exclusive right to sell a good or services within a certain geographical scope (the shopping mall context is the easiest example). Similarly, restrictive covenants can be placed on an ownership interest of land, which can prevent an owner from using their land in those restricted manners.
The Competition Bureau (the “Bureau”) is examining tenant exclusivity rights and restrictive covenants and wants to hear from industry participants. More specifically on October 21, 2024, the Bureau released an information call for the retail grocery sector market participants. With the goal of assessing “whether property controls imposed by grocery retailers are harming competition”, the Bureau is asking participants to submit any information that falls under the following categories (see: News Release):
- any instances where property controls have prevented domestic or international grocers or food retailers from opening a store in Canada;
- any instances where property controls have restricted the operations of a food retailer by, for example, limiting the sale of specific food products; and
- the benefits and drawbacks of property controls for food retailers, landowners or landlords.
The Bureau is specifically interested in exclusivity clauses that limit: a landlord from leasing to specific food retailers; the products that can be sold by food retailers; or the area within a store that can be used to sell particular food products. It also seeks information on restrictive covenants that prevent a food retailer from opening a store on a property, regardless of the term of the restriction.
The news release is in line with the Bureau’s increasing scrutiny on property controls in the grocery industry that was triggered by their ongoing investigations into some of the national grocery chains.
If you are considering making a submission or if you have any questions about limits to the activity that you can carry on at your leased or owned lands, please contact the authors or any member of our Real Estate team.
