The Competition Bureau in Canada has taken a firm stance against businesses using property controls in commercial real estate to limit competition. Property controls, such as exclusivity clauses and restrictive covenants, can impede competition by making it difficult for other businesses to enter the market or operate effectively.
Recent changes to the Competition Act have prompted the bureau to reevaluate its approach to enforcing property controls. The new guidance focuses on exclusivity clauses that restrict how land can be used by competitors and restrictive covenants that prevent property owners from leasing to competing businesses.
In response to concerns about anti-competitive practices, the Competition Bureau has launched investigations into major retailers like Loblaw and Sobeys to determine if they are imposing unfair restrictions on the use of real estate. Court orders have been issued to gather information about their real estate holdings, lease agreements, and customer data.
While there are some instances where competitor property controls may be justified, such as protecting incentives for retailers to invest in entering a new market, the bureau is clear that such controls must not go beyond what is necessary to support healthy competition. Exclusivity clauses should only be used to encourage investments that benefit the overall market, rather than restrict competition.
Enforcement measures are in place to address anticompetitive behavior, including issuing orders to end harmful practices, imposing monetary penalties, and prohibiting certain activities related to anticompetitive agreements. The Competition Tribunal has the authority to take action against agreements that harm competition, even if they do not involve direct competitors.
As the Competition Bureau seeks feedback on its preliminary guidance, Canadians have the opportunity to provide input on how best to regulate property controls in commercial real estate. By participating in the consultation process, individuals can help shape the future of competition enforcement in Canada and ensure a level playing field for businesses in the retail sector.