Divestitures Resolve Competition Concerns in Sobeys' Acquisition of The Oshawa Group

OTTAWA, December 22, 1999 — The Competition Bureau announced today that it will not challenge the acquisition of The Oshawa Group Limited by Sobeys Inc. Sobeys is a wholly-owned subsidiary of the Empire Company Limited of Stellarton, Nova Scotia.

To address the competition concerns raised during the Bureau's investigation, Sobeys will divest its interests in certain assets in two Ontario markets, three Quebec markets, and a food service operation in Atlantic Canada.

The Competition Bureau has concluded that these significant divestitures will ensure sufficient competition in the above markets. Should Sobeys be unable to divest the stores by December 31, 2000, the Bureau retains the right to have these assets placed with a Trustee for divestiture.

"This major expansion of Sobeys in the grocery business should result in more head-to-head competition among the major grocers in Canada, benefitting shoppers in the areas of service and pricing," said Konrad von Finckenstein, Commissioner of Competition.

With this acquisition, Sobeys becomes a significant grocery wholesaler and retailer in many markets where it previously had little or no presence. As a result, Sobeys will provide effective competition in Ontario, Quebec and Western Canada to such chains as A&P/Dominion, Loblaw, Métro-Richelieu, Overwaitea and Safeway.

This transaction with Oshawa Group also expands Sobeys' food service business. It has acquired the national food service distribution network (SERCA Foodservice Inc.), previously operated by Oshawa.

"In the Maritimes, competition in the food service industry has been maintained with the entry of Moncton-based MFS Foodservice Inc., in alliance with Gordon Food Service Canada," added von Finckenstein. "This alliance combines a strong management team, an in-depth knowledge of the market and its requirements, with the expertise of an established North American food service operation".

Prior to the acquisition, Sobeys and Oshawa Group were the two major full-line food service distributors in Atlantic Canada. To alleviate competition concerns, Sobeys will divest to MFS Foodservice Inc. the SERCA facility in Moncton, New Brunswick. MFS Foodservice Inc., in alliance with Gordon Food Service Canada, will serve hotel, restaurant and institutional accounts in New Brunswick, Nova Scotia and Prince Edward Island.

Backgrounder

The Competition Bureau is an independent law enforcement agency that is responsible for merger review and the lawful conduct of business in Canada, as defined by theCompetition Act.

For more information, please contact:

Julie Hébert
819-953-4257