New Competition Rules Bring Risks for B.C. Landlords and Tenants

Recent amendments to Canada’s Competition Act, effective December 15, 2024, could significantly impact commercial lease agreements across British Columbia and beyond. These changes broaden the law's scope to include agreements between landlords and tenants, even when they aren't direct competitors. Aimed at addressing grocery competition, the changes target exclusivity clauses and restrictive covenants, which often limit competition within a retail setting.

Exclusivity clauses, a common feature in commercial leases, typically grant tenants—like grocery stores or department stores—the exclusive right to operate their type of business within a property. While these arrangements attract tenants and protect their market share, landlords now face potential scrutiny from the Competition Bureau for anti-competitive conduct simply by agreeing to such terms. Experts suggest that these amendments, while politically motivated to address food inflation, may not yield significant practical effects on competition in the grocery sector.

Amid this regulatory shift, some major retailers are taking proactive steps. Walmart Canada recently announced it would waive competitive retail restrictions in its leases, signaling a shift in the industry’s approach to these clauses. However, questions remain about how effectively the Competition Bureau can enforce these changes and whether they’ll significantly impact food prices or broader competition.

For more insights into these developments and their implications for commercial landlords and tenants, read the full article here.