By Jon Steinman
Opinion: Sustaining, developing Canada’s co-operative economy is path toward certainty, resilience and new vision of what’s possible.
Whether the transaction is confirmed as legal or not, the pending sale of MEC is an affront to Canada’s storied and living history of co-operatives. I spent six months of 2019 travelling to 130 consumer-owned grocery co-ops across the U.S. and Canada where I delivered talks about the importance of the co-operative model of business ownership. Specifically, I said this at each of those events: “Consumer co-operatives are the most resilient business model for consumers to rely upon because any sale of the business to any other interest would need to be approved by its members (owners).” Heaven forbid I’m a liar!
The decision to forgo engaging the co-op’s members on the sale of the business isn’t in any way aligned with co-operative values nor ethics. For all intents and purposes, the decision by MEC’s board to sell the co-operative should be viewed by all as illegal in the eyes of co-operativism.
MEC's flagship store in Vancouver on Sept. 15. PHOTO BY NICK PROCAYLO /PNG
In negotiating the sale to Kingswood Capital Management, MEC’s board made a presumptive decision on behalf of the co-operative’s five million owners: that in the face of financial hardship, the member-owners would have preferred that their co-operative continue operating as a privately owned business. Also presumptive is that Kingswood would continue to operate MEC as ‘MEC’ and not sell it to a multinational sporting goods retailer or liquidate MEC’s assets. This is, after all, what private equity firms do for a living — maximize value for their investors. It should be up to the member-owners to decide whether or not they want this for the business they rightfully own, not up to the nine elected members of the board.
Without question, MEC’s member-owners didn’t legally and democratically elect their board to negotiate the sale of the business. Absolutely not.
Furthermore, if MEC is as troubled as the board claims it is, then why is a U.S. private equity firm interested in acquiring it? Clearly, in the eyes of Kingswood, there is a case to be made for MEC to continue in some capacity that appears profitable. By negotiating the sale of MEC to Kingswood, the MEC board has therefore admitted publicly to the Canadians who elected them that they too see value in a future for MEC. In seeing value in an MEC future and choosing to transfer that value out of the hands of member-owners and into the hands of private interests is a breach of the board’s fiduciary duties.
It’s the member-owners of MEC who should be granted the chance to decide what the future should hold for MEC, whether it’s deciding to 1) liquidate some or all of the business and its assets and distribute those proceedings equitably among member-owners or 2) to reinvest all or some of those proceedings into the development of a more streamlined, relevant and successful business that continues to fulfil the co-operative’s mission and vision.
A third possibility is that the member-owners are presented with a proposal to sell MEC to Kingswood. Member-owners may very well choose this option too. This is what democracy is supposed to look like inside a co-operative.
More than ever before, Canadians should be looking to the co-operative model as a vision of a new and more resilient economy. Co-operatives first and foremost exist to benefit the people who rely on their products and services, not a single individual or family nor a scattering of absentee investors and shareholders.
At this time of tremendous economic and social uncertainty, sustaining and developing Canada’s co-operative economy is a path toward certainty, resilience and a new vision of what’s possible. There’s nothing that leaves me with more certainty and confidence in our shared future than being one of 14,000 owners of my co-operative grocery store in Nelson, or being one of thousands of owners of my co-operative credit union, or being one of five million owners of my Mountain Equipment Co-op.
About the Author
Author Jon Steinman
Jon Steinman, MEC Member No. 40480519, is the author of Grocery Story: The Promise of Food Co-ops in the Age of Grocery Giants, and past board director and president of Kootenay Co-op.