What is the Grocery Code of Conduct?
The Grocery Code of Conduct in Canada is, at this point in time, a voluntary set of written rules and principles. It was designed to bring greater transparency, fairness, and predictability to the Canadian grocery supply chain. The new Office of the Grocery Sector Code of Conduct (OGSCC) has been established to oversee recruitment, onboarding, and education.
The Grocery Code of Conduct was developed collaboratively by the government, grocers, suppliers, and producer associations since around 2020. It aims to address long-standing power imbalances, especially the dominance of Canada’s five largest grocers (Loblaw, Walmart, Sobeys, Metro, and Costco), which together control roughly 80% of the market.
What is in the Grocery Code of Conduct?
The Code follows four main principles:
- Transparency and certainty: Deals must be clear and in writing. Companies cannot change agreements without proper notice.
- Fair dealing across the value chain: Companies must act ethically and honestly.
- Timely dispute resolution: Any issues are to be settled fairly and quickly through an independent complaint process.
- Simplicity for easier adoption: The code should be easy to understand and follow.
Key provisions of the Code
- Written, clear commercial agreements. This includes contracts, invoices, orders, and any amendments.
- Ban on unilateral changes to agreements, with requirements for good faith negotiations.
- Guidelines for payment terms, penalty fees, audits, and consumer complaints.
- Rules against abusive practices, such as sudden and/or one-sided contract changes or excessive penalties.
- Procedures for delisting products, supply chain forecasts, and protecting confidential information.
- A requirement for participating companies to train their staff and adhere to the Code in all their dealings and practices.
- Any disputes are to be handled first between the trading partners. If it is still unresolved, the Office of the Grocery Sector Code of Conduct (OGSCC) will provide mediation services.
Current situation
The Grocery Code of Conduct is in a transition phase. From June 1 to December 31, 2025, businesses are asked to start adjusting their practices to fit the code, but formal enforcement does not start until January 1, 2026. During this transition, companies should join the Office, access educational resources, and resolve any issues directly where possible.
The new Office of the Grocery Sector Code of Conduct is also getting ready for full operation: creating rules, hiring an adjudicator, and preparing to handle disputes. After January 1, 2026, the Office will fully enforce the Code, handle disagreements, and monitor compliance.
Why does the Grocery Code of Conduct matter?
The Code seeks to curb unfair practices by dominant retailers, like imposing fees on suppliers for preferred shelf placement. The goal is to stabilize supplier and retailer relationships, which would make the supply chain more equitable and resilient. Proponents of the code believe this can help reduce grocery price volatility. This stability and transparency, in turn, will indirectly benefit consumers.
The Code is significant for independent grocers and small and medium suppliers. They have, especially in rural and remote communities, historically faced unfavourable contract terms. They also have fewer options available to them when disputes arise. For them, the code can level the playing field.
Overall, it should lead to less conflict, more trust, and fewer sudden price hikes. It could make the grocery industry stronger and more reliable as a whole. The successful implementation of the Grocery Code of Conduct would be better for companies as well as shoppers.
How does it benefit regular customers?
While the Code is not directly meant to lower food prices, creating fairer business practices can make the supply chain more stable. This can mean fewer sudden changes in grocery prices and fewer shortages caused by business disputes.
Small or medium suppliers and retailers can compete more fairly, and won’t be in an unfavourable position. This could potentially increase choice and innovation on store shelves.
At the end of the day, if businesses are able to trust each other and operate smoothly, it ensures a better, fairer, and consistent supply for shoppers. It may also slow down price increases over time and combat sudden price hikes.
How do other countries use codes?
Countries like the UK and Australia have already implemented similar codes and practices. In the UK, the code used to be voluntary. However, after facing non-compliance issues, it is now mandatory and enforced by an independent adjudicator. The UK system is actually referenced as a model for Canada. It encourages collaborative dispute resolution and light oversight. In the current UK model, persistent non-compliance prompts regulatory action.
Both the UK and Australia have seen stabilized or reduced food inflation. Annual food inflation numbers in the UK remained below 3% from 2014 to 2022. They have also seen a reduction in unfair practices and disputes between retailers and suppliers. It helped create a balanced and fairer environment, leading to more competitive markets. This meant more choice for customers and lower prices, as smaller suppliers were able to remain viable and competitive. This increased product diversity further benefits customers.
It’s important to keep in mind that the code in Canada (or the UK) does not directly regulate retail pricing. It is a consequence of fairer and more efficient business practices.
Concerns about implementation
The Code is voluntary for now, and some experts worry that without making it mandatory, big retailers might not always stick to the rules. In the UK, the code only became effective after it was made mandatory, with government-backed enforcement. Compliance in the UK improved after the law gave more power to the adjudicator.
Another big concern is that the new Office cannot impose fines or control prices, so there are doubts as to whether all companies will follow the rules. It could also take time for all grocers and suppliers to be business-ready for the new rules.
So, while the code is voluntary for now, it may well become mandatory in the future. The UK quickly made the code mandatory around a year after launch. Australia has also modified their code. As of April 1, 2025, it is now mandatory for large grocery retailers and wholesalers. Since the UK model is referenced for the code in Canada, they will likely follow that pattern and opt to make it mandatory in the future. If most businesses sign up to do the right thing, then it may not become mandatory. It will depend on whether companies sign up voluntarily and follow best practices without a third party enforcing it.
Key takeaways
The Grocery Code of Conduct is a new, voluntary set of rules developed by Canada’s grocery industry. It aims to bring fairness, transparency, and stability to how suppliers and grocery retailers do business. The Office of the Grocery Sector Code of Conduct (OGSCC) manages the Code, which helps companies learn and follow the rules.
The Code requires written agreements, fair dealing, and a way to quickly solve disputes. It protects smaller companies from unfair practices like sudden contract changes or hidden fees. Although it doesn’t control food prices, it could lead to a more reliable supply chain and better business relationships, which may help reduce price spikes and shortages over time.
The Code starts operating fully in January 2026, after preparations in 2025. Some people are concerned it may not be effective since it’s voluntary. However, similar codes in other countries, like the UK, worked well once they enforced them seriously.
In the long run, the Code could help improve choice, fairness, and transparency for both businesses and regular shoppers.
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