Québecor says Loblaw deal with telecom is anti-competitive, calls on Ottawa to step in

The head of telecom and media firm Québecor is calling on the federal government to intervene in a deal between Loblaw and a company owned by Rogers and Bell that would see his company and others pushed out of 180 Loblaw-owned stores.

In a letter Pierre Karl Péladeau sent to Industry Minister François-Philippe Champagne on May 9, the Québecor CEO says Loblaw decided to "prematurely end" Québecor's contract for wireless devices and services at the telecommunications kiosks inside Loblaw grocery stores — a move he calls anti-competitive and contrary to the interests of consumers.

The Loblaw-owned supermarket kiosks are branded as The Mobile Shop and there are 180 of them across the country. Right now, the kiosks sell cell phone plans from seven providers, including Telus and Québecor's Freedom Mobile.

On the brand's "about us" page, The Mobile Shop says "we don't work for any one carrier, so we'll never play favourites."

In his letter, obtained by CBC News, Péladeau says The Mobile Shop will soon sell only Glentel products. Glentel is a retailer owned by Bell and Rogers.

Quebecor chief executive Pierre-Karl Peladeau speaks to the media after the company's annual meeting on Thursday, May 9, 2024 in Montreal. (Ryan Remiorz/The Canadian Press)

"(Loblaw) presents this decision as a simple choice of supply for its stores, but in our view, this is an approach aimed at excluding certain other cellular telephone operators to benefit the company Glentel," Péladeau says in the letter, translated from French.

"If Glentel obtains such favour from Loblaw, it is because it's a joint venture made up of the giants Bell and Rogers who once again seek to lock out competition and take Canadians hostage in their consumer choice."

In his letter, Péladeau asks Champagne for "direct and firm" intervention against Loblaw, Rogers, Bell and Glentel.

Responding on Wednesday, Champagne said this is an issue that should be handled by the Competition Bureau.

"It's the Competition Bureau that has the power for the federal government," said Champagne.

The Competition Bureau is an independent law enforcement agency. The minister does have the power to direct a market study in consultation with the commission, but that would be a different tool than an investigation.

When asked about the deal between Glentel and Loblaw, Deputy Prime Minister and Finance Minister Chyrstia Freeland pointed to recent changes the government made to the Competition Act that give the bureau more legal powers.

"We have put forward a generational change that is going to force more competition into the Canadian market," she told a press conference on Wednesday.

NDP Leader Jagmeet Singh said Wednesday that he's written a letter to the Competition Bureau calling on it to investigate the deal.

"When these anti-competitive behaviours happen, they need to be investigated immediately and they need to be stopped in their tracks," he told reporters outside the House of Commons.

New Democratic Party leader Jagmeet Singh speaks with reporters before attending a committee meeting on Parliament Hill, Thursday, April 11, 2024 in Ottawa. (Adrian Wyld/The Canadian Press)

In a statement, The Mobile Shop says its business represents "less than five per cent of sales in mobile phones and plans in Canada.

"Based on our limited market presence in mobile, our decision of which carrier to sell does absolutely nothing to competition," says the statement. "We are constantly reviewing our offering, and will continue to provide a range of choices, including strong, national low-cost options and full service plans."

In his letter, Péladeau also questions the existence of Glentel, a company co-owned by two of Canada's largest telecommunication companies, Bell and Rogers.

In 2015, Canada's Competition Bureau allowed the joint acquisition of the company to go through, provided that the two telecom giants put up an "administrative firewall" to prevent the sharing of competitively sensitive information.

The bureau did express a worry that the acquisition would "substantially lessen competition in the wireless sector."

In the letter, Péladeau says that while his company has reached out to Loblaw head office regarding the deal with Glentel, "they persisted, favouring commercial interests over the consumer's interest.

"It is imperative that measures be taken to preserve an environment of fair competition in the telecommunications and grocery sectors in the best interests of the Canadian population."

Increased scrutiny for grocers, telecom companies 

Péladeau's letter comes as grocers and telecom companies face increased pressure over prices.

A movement to boycott Loblaw is underway after the grocery giant reported $13.58 billion in revenue in the first quarter of 2024.

Loblaw agreed last week to sign the government's grocery code of conduct — but only if competitors do as well. The code is intended to address long-standing issues such as arbitrary fees, cost increases imposed without notice and late payments.

The almost empty produce section of a Toronto Loblaws on Friday, May 3, 2024. A group of shoppers called 'Loblaws is out of control,' which has 62,000 members, launched a boycott over the month of May to protest what it calls the company's high prices. (Chris Young/The Canadian Press)

The federal government says it's trying to coax international grocers to set up shop in Canada in an effort to lower prices.

The federal NDP forced debate Tuesday on a motion calling for an excess profit tax. The party has long called for such a tax.

Similarly, the industry minister said earlier this year that Canadians are still paying too much for telecom services after Rogers said it would hike the cost of some of its wireless plans for non-contract customers.

"Let's be clear. While some progress has been made to lower prices, Canadians still pay too much and see too little competition," said Champagne in January.