Grocery Competition Rises as Lease Rules Shift

Lease covenant reforms could boost grocery competition as regulators increase scrutiny and landlords and retailers watch the impact closely.

March 17, 2026

Jordan B.

Grocery competition faces potential boost as governments review restrictive lease covenants.
Recent changes to Canada’s Competition Act expand scrutiny of exclusivity arrangements in retail leases.
Provinces like Manitoba have enacted legislation banning exclusive grocery lease clauses.
Enforcement actions and voluntary removals suggest momentum for further reforms.

Key Takeaways

Regulatory Pressure Increases

Grocery competition in Canada may intensify as federal and provincial regulators focus on restrictive lease covenants that limit rival grocers from opening nearby, reports CoStar. Recent amendments to the Competition Act broaden the Competition Bureau’s mandate, making it easier to target anti-competitive practices, including exclusive use clauses that block new retail entrants.

Provincial and Federal Action

Commercial leasing law remains under provincial control. Manitoba passed new legislation in 2025 prohibiting property control covenants in grocery leasing agreements. At the federal level, competition authorities are actively investigating property control practices. Empire Co. Ltd., parent of Sobeys, recently agreed to remove a restrictive clause at its IGA outlet in Crowsnest Pass, Alberta, after concerns it stifled local grocery competition.

Industry Response and Implications

While some landlords argue the practical impact of these clauses is limited—since grocers often avoid direct competition voluntarily—industry leaders warn that legacy lease provisions can unexpectedly constrain landlord flexibility. US-based investors highlight the risks posed by outdated exclusivity clauses, which can linger for decades and hinder the evolving tenant mix in retail centers. The uncertainty comes at a time when broader shifts in lending oversight are already raising concerns about risk exposure across commercial real estate financing markets.

What’s Next

The Competition Bureau continues its investigation as policymakers weigh further action. Key grocers, including Loblaw, Empire, and Metro, have not commented publicly, but increased scrutiny suggests more changes in lease governance are likely. The sector is bracing for regulatory outcomes that may reshape grocery competition dynamics in both existing and new developments.