Canada's Grocery Code of Conduct Fully Operational, Including Dispute Resolution

New Era for Canadian Grocery Sector

As of January 1, 2026, Canada's voluntary Grocery Code of Conduct has become fully operational, marking a significant milestone in efforts to enhance fairness and transparency across the nation's food supply chain. This comprehensive framework, developed through a collaborative effort involving government, grocers, suppliers, and producer associations since around 2020, aims to regulate business relationships from food producers to retail shelves.

Core Objectives and Principles

The primary objectives of the Code are to promote predictability, transparency, and fair dealing within the grocery industry. It seeks to improve supply chain relationships, contribute to a competitive market, and enable all parties to make informed business decisions based on clear agreements. Key principles guiding the Code include:

• Transparency and Certainty: Emphasizing clear, written commercial agreements and prohibiting unilateral changes without proper notice.
• Fair Dealing Across the Value Chain: Requiring all supply chain participants, from large retailers to small suppliers, to act in good faith and adhere to ethical dealing.
• Timely Dispute Resolution: Establishing an effective and equitable mechanism for resolving commercial disputes.
• Simplicity: Designed to be easily understood and complied with by all stakeholders.

The Code specifically addresses long-standing power imbalances and issues such as unclear fees, payment delays, and unilateral contract alterations that have historically affected supplier-retailer relationships.

Dispute Resolution Mechanism in Full Effect

A crucial component of the fully implemented Code is its dispute resolution mechanism. This process mandates that parties first attempt to resolve disputes through internal escalation mechanisms. If an agreement remains elusive, the Office of the Grocery Sector Code of Conduct (OGSCC) steps in to provide mediation services. The OGSCC, an independent body, is responsible for administering the Code and ensuring its fair and consistent application. Karen Proud serves as the President and Adjudicator of the OGSCC, overseeing its implementation and enforcement. All dispute resolution processes under the OGSCC are conducted confidentially.

Industry-Wide Participation and Oversight

All major Canadian grocers have formally agreed to join the Code, including Loblaw, Sobeys (parent company Empire Co. Ltd.), Metro, Walmart, and Costco. Empire Co. Ltd. was the first retailer to sign on, while Lactalis Canada was the first supplier. Over 120 companies, encompassing a wide range of large and small suppliers, have also committed to the Code. The OGSCC will monitor the execution of the Code and is slated to publish an annual report starting in 2026, outlining sector-wide trends and recommending improvements. While the Code is voluntary, the federal government had previously indicated that it could be made mandatory if major players failed to participate.

Anticipated Impact

While the Code is not primarily designed to directly reduce grocery prices, its architects, including Michael Graydon, CEO of Food, Health and Consumer Products of Canada, anticipate that it will foster a more stable and predictable supply chain. This stability is expected to enable smaller suppliers to compete more effectively, innovate, and introduce new products, ultimately leading to greater choice, reliability, and resilience in the grocery system for consumers. The Code's focus is on improving the conduct and fairness of business relationships rather than regulating prices or controlling shelf space.