For years I’ve been buying the same turkey bites from the grocery store (Canadian made, of course). They’re a high protein, grab-and-go snack. And, for years, I’ve paid about $7.00 for them. During my last visit to the grocery store, those same turkey bites were a whopping $12.99. Reading the sticker price led to an audible gasp while strangers around me nodded in agreement, because without having to say anything, we were all thinking the exact same thing – yes, an 85% price increase is astronomical, but this is our new reality.[1] Just after my shopping experience, I came across a few articles published about the Grocery Code of Conduct (the “Code”) with headlines framing it as a response to affordability.[2] I read the articles expecting to learn how grocers intended to respond to public concerns about pricing. I was wrong. The Code does not address higher prices and instead it seeks to clarify the roles of sellers and producers. While the Code doesn’t address how grocers will reduce the price of my turkey bites, it does offer a useful illustration of the limits of industry self-regulation.
What is the Grocery Code of Conduct (the “Code”)?
It took roughly 5 years of consultation, meetings and negotiation before the grocery industry published its first voluntary code of conduct signed by major grocers including Loblaws, Metro, Costco Canada, Walmart Canada and Empire Co., along with roughly 150 suppliers.[3] The Code follows the path paved by other, similarly situated countries, like Australia, and it addresses concerns raised by producers, suppliers and farmers about the consistency and predictability of fees paid by these participants to grocers. By introducing the Code, the industry is hoping to level the playing field, create more certainty and allow suppliers to escalate disputes. By clarifying the roles of the grocer and the producer, the benefit to the consumer will be more of a knock-on effect. The thinking is that more fee predictability will lead to lower prices for consumers. However, according to research conducted by CIBC, who surveyed retailers, wholesalers, suppliers, brokers and industry participants, respondents believe that there will be no notable impact from the Code.[4]
Broad (and Meaningless) Language
The Code and the governance structure that supports it is an attempt at industry self-regulation, and industry self-regulation can be tricky. While it is more cost effective for governments and it can succeed, one of the major flaws in this type of approach is that foundational instruments may be diluted to achieve industry support.
A reading of this code of conduct suggests that the industry took the ‘watered-down’ approach to achieve industry sign-on. The Code starts out strong with a statement of principles:
“Contribute to a thriving and competitive grocery industry, delivering the vital goods upon which Canadians in every community depend, recognizing the needs of all stakeholders in the grocery value chain, including the unique realities facing small and medium enterprises, the realities of the Canadian marketplace, and the importance of environmental, social and governance principles.”[5]
However, after this statement of principles, the principled language in the Code dramatically falls off.
The Code does not address how retailers and suppliers will achieve their stated goals or go deep on important definitions, most importantly, it is silent on the meaning of environmental, social and governance principles (“ESG”). The Code avoids defining ESG. Defining ESG may have been challenging, given that its meaning varies widely across companies and industries. While each of the Code’s signatories may have understood ESG differently, to be meaningful, it is important that those principles be explicit. For example, specific issues that could be of interest in the grocery supply chain could be numerous, including labour practices, environmental impact and supply-chain ethics. The potential ethical issues in the global grocery industry supply chain are manifold and complex and while these issues are often addressed through the procurement processes, or through corporate ESG benchmarks, reporting and other internal governance processes, the Code lumps all potential social concerns into an overall “ESG” bucket. A more principled approach would have been to clearly define the most important terminology and identify the red lines.
After its statement of principles, the Code then reiterates concepts that already exist in law. For example, section 1 reiterates the state of law as it currently exists: that parties have the right to contract, negotiate terms of agreements and enter into agreements, that the parties have to act fairly in their dealings, and it reinforces the Competition Bureau’s pre-existing authority. Defining pre-existing law (and common law), the authority of the Competition Bureau, or re-confirming the purpose of existing contracts or agreements (again, likely already defined in the procurement process) adds little substantive value and misses and opportunity for clear guidance.
The above examples illustrate the dilution pitfall in industry self-regulation. To help get industry buy-in, often meaningful principles are weakened so they’re more palatable to more parties, but this weakens the foundation.
Lacking ‘Teeth’
When establishing industry self-regulation another tricky element includes compliance and oversight which can be weakened by inadequate power provided to enforce the Code and voluntary engagement. Effective monitoring and enforcement powers help to provide ‘teeth’ to the foundational document as does mandatory participation.
In an interview with the Financial Post, Gary Sands, Senior VP of the Canadian Federation of Independent Groceries, describes the Code as a set of principles or provisions.[6] For industry self-regulation to succeed, the Code’s signatories should approach it as a set of mandatory ethical requirements to which all participants in the Canadian industry must adhere. Additionally, all members must agree to embed the Code into their organizational governance structures and abide by the consequences if they fail to meet the Code’s principles.
The Code is administered by the “Office of the Grocery Sector Code of Conduct” (“OGSCC”) and the Code’s signatories bear the financial burden of ensuring industry compliance through this newly established governance framework[7] which includes the appointment of an Adjudicator to administer the Code and resolve disputes between members.[8] Signatories must also adhere to the authority granted to the Adjudicator and abide by the Adjudicator’s recommendations, regardless of whether they agree with them. At this stage, it appears that the Adjudicator will only preside over issues involving two signatories to the Code but only once all other complaint resolution mechanisms have been exhausted. The Adjudicator’s decisions are non-legally binding with consequences somewhat limited to public notice of non-compliance and remediation recommendations.[9] Without strong decision-making authority and consequences that include monetary fines or penalties, an Adjudicator’s decision-making authority to enforce the Code are unlikely, on their own, to drive meaningful compliance.
Some players in the Canadian grocery industry are not currently signatories to the Code and that position is understandable. The benefit to being a non-member at this stage since they benefit from being ‘free riders’. They can participate at their discretion and opt in whenever they like. While they do not contribute financially, they receive the benefit from the industry’s initiatives, which includes improved overall reputation and the lack of governmental regulation and oversight. At this early stage, given that inclusion is voluntary, it may be more beneficial for some organizations to sit on the sidelines and wait to see how the process unfolds by observing the Adjudicator and its decision-making from afar.
A Missed Opportunity
Here’s the final pitfall of industry self-regulation that I would like to address here – the missed opportunity to address consumer concerns. At this moment, most people worry about the price of their groceries, they worry about price inflation, consistency in pricing, and some believe that there is no incentive for members of Canada’s food industry to reduce prices because there is little competition in the market.[10] These concerns are hotly debated in parliament, news and through social media outlets impacting industry reputation. While clarity between grocers and suppliers was likely the low-hanging fruit that needed addressing, after prices steadily increased during COVID with stressed supply chains, the grocery industry had a genuine opportunity to add to public dialogue, but they seemed to have missed the opportunity to implement meaningful and impactful consumer policies to address public concerns.
Some Concluding Thoughts
It may be premature to judge the Code and the OGSCC at this early stage of development and, who knows, these initiatives might ultimately lead to reduced prices for consumers. Industry self-regulation has its benefits. It allows the industry self-determination, greater flexibility, and it may be the most cost-effective solution for governments.[11] But, for now, it seems that I may have to find a protein substitute for my turkey-bites.
__________________
[1] Soon after drafting this blog, ‘Operation Epic Fury’ began with significant shipping challenges occurring in the Strait of Hormuz. It is likely that these global events will further exacerbate shipping issues and food costs over the next few months.
[2] One of the articles: The Canadian Press, “Canada’s grocery code of conduct kicks in Jan. 1, with buy-in from 5 major grocers: Code could improve grocer-supplier relations, but not a silver bullet for prices” (CBC: January 1, 2026) (Online: https://www.cbc.ca/news/business/canada-grocery-code-of-conduct-jan-1-9.7031468); “Canada Grocery Code of Conduct Provisions” (OGSCC: 2026) (Online: https://canadacode.org/code/code-of-conduct/)
[3] “Canada’s First-Ever Grocery Code of Conduct Comes Into Effect” (FDA: February 2, 2026) (Online: https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Canada%27s%20First-Ever%20Grocery%20Code%20of%20Conduct%20Comes%20Into%20Effect_Montreal_Canada_CA2026-0003.pdf ); “Retail fees in the Canadian food industry: Findings of the Federal-Provincial-Territorial (FPT) Working Group on Retail Fees” (Government of Canada: July 2021) (Online: https://agriculture.canada.ca/en/sector/data-reports/retail-fees-issue-canadian-food-industry).
[4] Denis Paglinawan, “New Grocery Code of Conduct won’t have notable impact, insiders say” (Financial Post, January 28, 2026) (Online: https://financialpost.com/news/retail-marketing/grocery-code-conduct-wont-impact): Quote by Mark Petrie and Chantel Pearce, CIBC analysts.
[5] Emphasis (underlining) added by me.
[6] “Grocery code of conduct could cut food prices,” Interview: Larysa Harapyn and Gary Sands (Financial Post: November 20, 2023) (Online: https://www.youtube.com/watch?v=rYEuw-8sYck).
[7] The Code is read together with a Governance Framework, By-laws and Operating Rules that will only apply to those who are registered members.
[8] “OGSCC Finalizes Governance Framework and Launches Formal Recruitment” (OGSCC) (Online: https://canadacode.org/news/ogscc-finalizes-governance-framework-and-launches-formal-recruitment/).
[9] “Dispute Resolution Management Process” (OGSCC: 2026) (Online: https://canadacode.org/code/dispute-resolution/). For the DRMP to apply, it requires that both parties be participating members at the time of the alleged dispute (s. 2.2). The decision of the Adjudicator is non-legally binding (s. 6.3(d)) and consequences of non-compliance with the Code and the Adjudicator’s decision or remediation recommendation includes publishing a Notice of Non-Compliance and report on the OGSCC website (s.6.4).
[10] “Canada Needs More Grocery Competition” (Competition Bureau Report: June 27, 2023).
[11] The federal government has stepped in to offer GST rebates while food affordability continues to be hotly debated. “Carney announced grocery rebate amid growing affordability issues for Canadians,” Press Conference (Global News: January 26, 2026) (Online: https://www.youtube.com/watch?v=9l-6o4Ech50).
The post Why the Grocery Code of Conduct Won’t Lower Prices and What It Shows About Industry Self-Regulation appeared first on Slaw.