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Comment by ziddoap | Hacker News Reader

Well, one reason is that Canada had a ~15 year bread price-fixing scandal come to light somewhat recently.

And the same people that colluded on bread just so happen to sell other grocery goods. Some people think: "hey, maybe we should check out the other stuff they sell". Which seems reasonable to me.

https://en.wikipedia.org/wiki/Bread_price-fixing_in_Canada

From an anecdotal standpoint, when many of the groceries I buy seem to have gone up in price at a rate well outpacing inflation, I can't help but wonder what the hell is going on.

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Sure, but even during the price fixing period Loblaws' profit margin was sub-5%, and currently sits a 3.3%.

Yes, it obviously shouldn't have happened, but there's no piñata of profit just waiting to be smashed apart that would magically drop grocery bills.

The profit margin figure cited for grocers is the margin on their "main business" — i.e. revenue on grocery goods sold minus cost of grocery goods from suppliers.

But this ignores other ways grocers make money (at much higher margin) — e.g. by charging their suppliers for shelf space/positioning.

No that's their total net profit margin as reported in the earnings statements.

It also ignores that they often own the suppliers. "Woops, our supplies raised the price, so we need to too."

George Weston Limited, the top-level entity that owns Loblaws and all subsidiaries has an even lower margin, at 2.9%. This should account for the entire umbrella of ownership, I believe.

That's overall profit margin, right?

So they can collude on just a few essentials, like I don't know... Bread maybe? And make an absolute killing on bread and mask those profits by claiming that their overall profits are down?

>So they can collude on just a few essentials, like I don't know... Bread maybe? And make an absolute killing on bread and mask those profits by claiming that their overall profits are down?

1. If they actually want to make a profit, surely it'd make sense to price fix some high value/volume item rather than something cheap like bread? If anything choosing to price fix bread seems more like incompetence than evil villainy.

2. The parent specifically acknowledges that price fixing isn't okay, but his contention is that overall margins is still low. Who cares if margins for a certain item is high? Are you also upset that mcdonalds make orders of magnitude higher margin on soda than burgers?

>If they actually want to make a profit, surely it'd make sense to price fix some value/volume item rather than something cheap like bread?

Weird that they price-fixed bread for so long then. If it wasn't for profit, was it just for pure hatred of poor people or what?

>If anything choosing to price fix bread seems more like incompetence than evil villainy.

I don't buy "incompetence" as an excuse for a 15-year price-fixing scheme.

>Who cares if margins for a certain item is high?

Who cares if margins across the board are low?

>Are you also upset that mcdonalds make orders of magnitude higher margin on soda than burgers?

I'm upset that there is a history of collusion in the pricing of the food I have to buy to live. I support efforts to make sure more collusion is not happening.

>I don't buy "incompetence" as an excuse for multiple vendors colluding on prices.

I'm not sure why you're going so hard on this strawman. At no point did I argue it was okay to price fix. In fact in my previous comment I was pointing out specifically that it wasn't okay.

>Who cares if margins across the board are low?

>I'm upset that there is a history of collusion in the pricing of the food I have to buy to live. I support efforts to make sure more collusion is not happening.

Your original claim was "many of the groceries I buy seem to have gone up in price at a rate well outpacing inflation". arcticbull's response was that grocery store margins have stayed low. That seems like a perfectly reasonable response to your claim. You also mentioned bread price fixing, but I don't think anyone is claiming "well their margins are low so price fixing doesn't exist". It's clear that he was addressing your point about overall grocery prices. In that context looking at overall inflation makes more sense than pointing out one specific item has high margins. More to the point, inflation is derived from the price changes from a basket of items. It's therefore almost guaranteed that there's going to be items that will rise higher than inflation. The mere fact that some prices are rising faster than inflation isn't evidence of collusion or price fixing.

>I'm not sure why you're going so hard on this strawman.

You literally said: "choosing to price fix bread seems more like incompetence than evil villainy"

Replying to that is a strawman? Okay.

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