May 28, 2023

The Queens County Citizen

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Retail Business | Collusion is not limited to prices

Retail Business |  Collusion is not limited to prices

Two competing traders cannot legally agree to close their business on Monday morning to avoid harming the other’s business due to fines or imprisonment. The Quebec Hardware and Building Materials Association (AQMAT) learned this the hard way.

Posted at 6:00 am

Nathaelle Morissette

Nathaelle Morissette

For several months, AQMAT and its president, Richard Darvey, have been campaigning to reduce opening hours to give traders and their employees a little breathing room, amid severe staff shortages. The idea arose that the two traders together decided to have similar opening hours.

However, this method is illegal. Competition Bureau Mr. It advised Darvey that he could be fined up to $25 million or even jailed if he encourages its members to agree to work hours.

Foot forn by Akmat

Richard Darvey, president of the Quebec Hardware and Building Materials Association

“A friendly agreement between competing businesses to agree on the same schedule may be a tacit option [dans le dossier sur les heures d’ouverture]But the Competition Bureau recently ruled that such cooperation is illegal and subject to fines and jail time,” Darvey wrote earlier this week. The government has amended the law on business opening hours.

go back In August 2021, the Competition Bureau raised its “concerns” about “planned actions” by the firm to initiate substantive discussions on store opening hours with the AQMAT president.

“An agreement between competitors to control and co-ordinate their business raises concerns under Section 45 of the Act [sur la concurrence] “, we can read in the letter sent by the Competition Bureau to Mr. Darvey.

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It also adds that “anyone convicted of this offense faces a maximum fine of $25 million and imprisonment for up to 14 years, or one of these penalties.” The letter reminds that in addition to competitors, a party that “encourages or advises others to do so” also risks being held “criminally liable”.

In an email sent to Press, the competition bureau’s spokeswoman, Marie-Christine Vezina, declined to comment on this specific case because “the bureau conducts its work in a confidential manner.” However, she recalled that it was illegal for the two companies to “fix prices, allocate sales, territories, customers or markets, reduce or eliminate the supply of product or service or rig offerings.”

In an interview, Mr. Darvey believes this is a “too flexible” definition of what constitutes collusion.

The Competition Bureau is convinced that encouraging traders to talk to each other to make joint decisions, for example closing at 6pm on Thursdays to avoid cannibalizing each other, is crossing too many lines and we are colluding.

Richard Darvey, president of the Quebec Hardware and Building Materials Association

“Their argument is that two competing businesses cannot agree to keep the same product from reaching the consumer,” he said, adding that he would respect existing law in the process.

The result: In the face of labor shortages, neighborhood hardware stores, tempted to follow the same schedule and close for a few hours to give their employees a break, won’t go ahead for fear of reprisals.

Annie Paquette, general manager of Pasquier Food Markets, which has grocery stores in Delson and Saint-Jean-sur-Richelieu, already had the idea. During COVID-19, she often worked in collaboration with other supermarkets. “We have already thought about it, but the problem is that there are corporate stores in every city. »

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According to her, they must follow the schedule set by the parent company and cannot modify it as they see fit. Moreover, Pasquier’s general manager did not know that such a practice was illegal. “We never do anything illegal. »

Division in the early hours

Faced with such a situation, Smt. opined that it is up to the government to rule on this issue so that all traders are on an equal package. According to her, no trader would dare to close earlier on Saturday or open later on Monday unless competitors change their schedule.

“We are very much in favor of the idea that the government should create a law so that our employees can breathe, said Sylvie Sene, co-owner of Avril supermarkets. In the meantime, if other grocery stores are open, we are not closing. »

“It should have equal rules, believes Louis Cote, vice president of operations for Goulet Sports Group, owner of a dozen Sports Experts stores. At that time, competition will follow. Merchants cannot decide their opening hours themselves, especially those with stores in shopping centers, they must respect the rules imposed by landlords. Mr. Cote suggested.

AQMAT is also seeking government intervention to change opening hours, closing earlier on Sundays or certain evenings. However, other trade associations do not have the same position.

The Retail Council of Canada (RCC) — which represents IGA, Metro, Loblaw, Costco and Walmart — says its members don’t want the government to intervene to change a law that affects everyone equally.

According to Michel Rochet, president of the CCCD for Quebec, “traders have a good deal of flexibility to make the decision that concerns them”. Mr. Rochette believes that everyone can choose a schedule that works for them personally.

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At the Quebec Retail Trade Council (CQCD), the director general, Jean-Guy Cote, will consult his members on the question after the election. He recognizes that not everyone will agree with this file.

Although he recognizes the importance of having competitors’ schedules on “one’s radar,” Alexandre Berube, an economist specializing in management, believes the debate over labor shortages and early hours could be an opportunity to start a more global reflection. “Companies need to ask themselves: Is it relevant for our users to open more frequently? This is where business model innovation comes into play. »