SUPPORTING STATEMENT: Canadians purchased over $109 billion of grocery products from supermarkets and other grocery stores in 2022, up from $97 billion in 2019.7
Since 2020
Canadians have experienced a prolonged period of food price inflation, and in this environment Metro along with other retailers succeeded in growing their average
profit margin.
Backlash against anticompetitive practices can harm a company's public reputation and increase pressure for new regulation. In October 2022 the Canadian
Competition Bureau launched a study of grocery store competition in Canada, where the country’s five largest grocery retailers control 80% of the market. The
study focused on promoting greater retail grocery competition as the Bureau believes more competition can lead to lower prices, more choices, and better
convenience for consumers.
The Bureau issued its report in June 2023, finding that Canada's largest grocers’ food gross margins generally increased by a modest yet meaningful amount over
the last five years, indicating a sign of a lack of competition in Canada’s grocery industry.8
The Bureau focused its analysis on food gross margins but indicated it would have preferred to undertake a more expansive analysis to better understand how
grocers priced specific products, and more broadly to understand grocery competition in Canada.
The impediment to this expansive analysis was the failure of Canada’s grocery retailers to provide the Bureau with the information it requested. Notably, the
Bureau included a section specifically on the retailers’ cooperation with the study:
Did Canada’s grocery giants cooperate with the Bureau’s study?
There have been questions concerning the amount of cooperation and financial information shared with the Bureau by Canada’s grocery giants during
this study…
The Bureau is not able to disclose the specific information it was provided, owing to the confidentiality requirements of the Competition Act. However, in
general, the Bureau can say that the level of cooperation varied significantly, and was not fulsome. In many instances, the Bureau was not able to obtain
complete and precise financial data, despite its repeated requests.
In June 2023, a Canadian parliamentary committee issued a report on food price inflation. The report made several recommendations related to potential
anticompetitive practices, including increasing the Bureau’s information gathering powers, reviewing competitive thresholds for mergers, and establishing a
commission with a mandate to analyze data relating to price formation and margins in transactions along the agri-food supply chain.

While we are enthusiastically supportive of positive profit and returns, we want to ensure that the Board is addressing risks to the long-term health of our company
and its brands from governance and compliance issues related to potentially anticompetitive practices. We believe shareholders would benefit from more
information about our company’s management of these risks.