Canada’s Grocery Code: Key Features and How It Compares to the UK’s GSCOP

The Canada Grocery Code of Conduct (the “Code” or “Canadian Code”) was created in response to concerns about the significant power imbalance between a small group of dominant grocery chains and the suppliers who rely on them. These pressures intensified during the COVID-19 pandemic due to rising commodity prices, labour shortages, transportation bottlenecks, energy costs, and weather-related disruptions. For many producers, especially smaller ones, unclear fees, payment delays, and unilateral contract changes made it difficult to operate in a predictable and fair environment. A 2021 report by the Federal-Provincial-Territorial Working Group on Retail Fees found that retailer fees had grown in both form and scale, straining supply chains and discouraging investment by Canadian food processors. With five major retailers controlling more than eighty percent of the national market, suppliers argued that the imbalance was limiting their ability to access shelves and weakening competition from independent retailers.

The Code aims to address these challenges. It is an industry-led, voluntary framework that promotes fair dealing, good-faith negotiations, and greater transparency in supplier-retailer relationships. It encourages clear agreements, consistent financial terms, and accessible dispute resolution processes, all without introducing government-directed price controls. A notable feature of the Canadian approach is its broad reach. The Code applies not only to major retailers but also to independent and medium-sized businesses, reflecting a broader intention to shift the overall culture of how grocery sector actors work together.

How Canada’s Code Differs from the UK Model

Canada is not the first jurisdiction to adopt a grocery-sector code. The United Kingdom’s Grocery Supply Code of Practice (the “GSCOP”) provides a particularly useful comparison because its evolution from a voluntary initiative to a statutory model highlights both the potential and the limitations of grocery codes in concentrated markets.

Scope

Canada’s Code remains voluntary and non-binding until the Dispute Resolution Management Process (the “DRMP”) becomes fully operational on January 1, 2026. It applies across the grocery value chain and is principles-based, focusing on predictability, fair dealing, and transparency. By contrast, the GSCOP applies only to the largest UK grocery retailers with more than one billion pounds in annual turnover. The UK regime became statutory in 2010 and is overseen by the Groceries Code Adjudicator (the “GCA”), which has broad investigatory responsibilities.

Enforcement

Enforcement represents the clearest difference between the two systems:

• Canada: There are no statutory penalties and no binding enforcement mechanism. Compliance relies on industry commitment, reputational accountability, and the cultural shift the Office of the Grocery Sector Code of Conduct (the “OGSCC” or “Office”) aims to promote. The Adjudicator’s mandate emphasizes education and early resolution of issues, with structured processes available only after informal avenues are exhausted.
• United Kingdom: Compliance is mandatory and backed by an independent regulator with investigative powers, arbitration authority, and the ability to levy fines of up to one percent of a retailer’s annual turnover. Despite these powers, enforcement has been criticized for being reactive and dependent on suppliers filing complaints.

Even under a statutory regime, the UK has struggled to protect smaller suppliers. Many initially hesitated to report retailer misconduct for fear of retaliation, including delisting or reduced order volumes. This underreporting limited the GCA’s visibility into systemic problems. While the GCA’s annual surveys indicate that retailer-supplier relations have improved since the early 2020s, recent developments underscore continuing vulnerabilities. In 2025, the GCA opened an inquiry into Amazon for alleged delayed payments after fewer than half of survey respondents believed Amazon complied consistently with the GSCOP. A statutory review of the GCA’s performance is also underway to assess the effectiveness of its enforcement efforts.

Contractual Requirements

The Canadian Code encourages written agreements but does not mandate specific contractual terms or prohibit certain practices outright. The intention is to reduce administrative burdens and avoid rigid requirements that could deter participation, particularly among smaller players. The UK takes a more prescriptive approach. Retailers must incorporate the GSCOP into their written agreements, and certain practices, such as retrospective changes, are strictly prohibited.

Regulatory Philosophy

The Canadian Code began as a proposal by Food, Health & Consumer Products of Canada (“FHCP”) and Empire Co. Ltd. (“Empire”). This led to the formation of a 10-member steering committee co-chaired by FHCP CEO Michael Graydon and Retail Council of Canada President and CEO Diane Brisebois to develop an implementation framework. A 25-member cross-industry working group, including representatives from the retail, manufacturing, and primary processing sectors, provided operational input.

The Office has emphasized guidance, education, and transparency rather than enforcement. Oversight is focused on building trust and cultural change. By contrast, the UK model relies on deterrence through detailed conduct rules and statutory penalties. The GCA’s authority is grounded in mandatory compliance, public investigations, and the ability to order corrective actions.

Developments Since Spring 2025

Since the OGSCC began operations in March 2025, the Office has been building the administrative and governance structures needed for implementation. The June to December 2025 period is designated as a transition phase focused on outreach, education, and preparing operational systems. On November 28, 2025, the Office announced that all foundational components of the DRMP had been completed and released the DRMP Manual, with the framework scheduled to come into effect on January 1, 2026. The Office also confirmed that it had begun its formal recruitment process.

At the October 20, 2025 meeting of the Standing Committee on Agriculture and Agri-Food, OGSCC President and Adjudicator Karen Proud outlined the three components of the DRMP. The first is the formal process, where parties are visible to one another and disputes may culminate in a written decision and publication of compliance findings. The second is a strictly confidential portal enabling members to report concerns anonymously, after which the Office determines whether the issue raises potential Code violations. The third enables trade associations to bring systemic concerns forward for early intervention. Proud stated that she expects most of the Office’s work to take place within the confidential and systemic streams, where issues can be resolved before they escalate into formal disputes.

Empire and Lactalis Canada were the first retailer and first supplier to sign on during the informal recruitment period. Other major retailers, although publicly supportive, had indicated that they were waiting for the finalized DRMP before formally committing. Proud has confirmed that these retailers were actively involved in the crafting of the DRMP and stated that she expected them to sign on once it was complete. The OGSCC is also collecting early issue reports through its member portal to help identify patterns, and annual reports beginning in 2026 will provide visibility into how disputes arise, emerging challenges, and areas for improvement.

Lessons from the UK: What Canada Should Monitor

The UK experience demonstrates several risks Canada must be prepared to address. First, voluntary codes often fall short when compliance depends on industry goodwill. Suppliers, particularly smaller ones, may be hesitant to report issues if they fear retaliation, limiting the regulator’s ability to detect systemic problems. Second, even statutory enforcement power does not eliminate underreporting or power imbalances in a concentrated market. Third, when a large share of national grocery sales is controlled by a few retailers, a dispute-driven framework may mitigate only the most egregious practices without significantly changing underlying commercial dynamics.

Canada’s model diverges in one important respect. The Code imposes two-way obligations on both suppliers and retailers, unlike the GSCOP, which focuses exclusively on retailer conduct. This is perplexing given the stated purpose of the Code – namely, to moderate adverse impacts on suppliers resulting from the power imbalances. This may encourage a more cooperative culture, but it also means disputes may be more nuanced and may require the Adjudicator to navigate complex reciprocal obligations.

Implications for Canada

The Canadian grocery market shares many of the same structural vulnerabilities as in the UK, including high market concentration, supplier fear of retaliation, and limited enforcement tools. Without binding mechanisms or statutory penalties, smaller suppliers will likely remain reluctant to “bell the proverbial cat” by initiating the dispute-resolution system. Nonetheless, the OGSCC’s annual reviews and increased visibility into systemic concerns may help build an evidence base for future reform. If the voluntary approach fails to produce meaningful change, legislative intervention or a move toward a mandatory framework remains a possibility, as occurred in the UK.

On balance, the intercession of the Code maintains the status quo for another ten to twenty years. In the meantime, homegrown producers and suppliers to the retail grocery sector and their counsel will be circumspect in advancing direct claims. Perhaps there may be a role for producers’ and manufacturers’ associations to take the lead role in testing the use of the Code’s dispute resolution system.

About the authors:

John Sotos, Partner

John leads the firm’s grocery practice and is widely regarded as a dean of the franchising, licensing, and distribution bar. He has been recognized by Chambers Canada, Canadian Legal LEXPERT Directory, Who’s Who Legal, and Best Lawyers in Canada as a leading Canadian practitioner. John can be reached at 416.977.9806 or jsotos@sotos.ca if you would like to discuss this or any other topic relating to the operation of your business.

Misha Nili, Articling Student

Misha is one of our articling students for the 2025-2026 term, working primarily with the Corporate and Commercial department.