Rhode Island Cracks Down on Restrictive Grocery Covenants Blocking Competition

Rhode Island moves to dismantle a decades-old practice that turned thriving shopping districts into food deserts. The state passed legislation in July banning restrictive covenants – legal provisions that prevent new grocery stores from opening in spaces vacated by chains like Stop & Shop and Walmart. The measure forms part of Lieutenant Governor Sabina Matos’s Fair Price Grocery Agenda, making Rhode Island only the second state to outlaw these so-called “scorched-earth” tactics.

Woonsocket resident Jeannine Johansen recalls when the city’s steep streets featured multiple grocery options: Almacs, A&P, Piggly Wiggly and Star Market. During the blizzard of 1978, residents walked to nearby stores when roads closed. The native Woonsocketer watched competition create affordability as families shopped around for good prices. That era ended as chains withdrew and locked their former properties behind legal barriers that blocked rivals for decades.

The city now supports just one full-service supermarket – a solitary Price Rite serving 45,000 residents, with 37% food insecure. The store sits perched atop a hill in a strip mall at the city’s edge. A nearby Dollar General offers frozen meat and packaged foods, while locals with vehicles travel beyond city borders to Shaw’s or Aldi for deals. Yet 18% of Woonsocket residents own no vehicle, leaving them stranded without accessible grocery options.

Community Groups Fill the Grocery Gap

Every week, approximately 300 families shop for free produce and pantry staples at a bus-accessible marketplace. Community non-profit Connecting for Children and Families hosts the distribution where Johansen volunteers, though organizers acknowledge the need far exceeds what they can provide. The volunteer-run system highlights how corporate decisions to restrict future competition created lasting harm that charitable organizations now struggle to remedy.

Restrictive covenants operate as legal weapons in corporate real estate strategy. Chains write these provisions into a grocery building’s deed or lease, commonly disallowing food sales at that location when the company vacates, sometimes for decades. A company may open another location miles away and wants customers to travel there; it most assuredly wants to prevent rival grocers from siphoning off shoppers. These provisions have flown largely under the radar for half a century, even as they transformed once-thriving neighborhoods into lingering food deserts.

Woonsocket Bears Scars of Three Major Covenants

Woonsocket carries at least three restrictive covenants that severely limit grocery access. Stop & Shop vacated a space back in 2004, leaving behind restrictions that persist today. Walmart abandoned the city in 2011, imposing a covenant that barred both grocers and pharmacies from its former location. The property sat vacant for six years while Walmart blocked competitors from entering.

“When Walmart finally sold the building in 2017, it included a ’25-year restrictive covenant prohibiting the property from being used for a grocery store or supermarket,'” according to a national letter from U.S. senators to the Federal Trade Commission requesting investigation of these practices nationwide.

The covenant also prohibits use as “a wholesale club operation similar to that of Sam’s Club.” When the lot finally became Job Lot, the restrictions remained in force, extending until 2042. Senator Melissa Murray of North Smithfield/Woonsocket notes that such covenants typically last around 30 years, creating multi-decade food access problems.

Senate Passes Bill Targeting Anti-Competitive Practices

Senate Bill 2644 passed through the state Senate on May 5 and awaited a House hearing before becoming law in July. Senators Melissa Murray and Brian Thompson (Woonsocket/Cumberland) introduced the measure on February 27 as part of the Fair Price Grocery Agenda. The legislation restricts national and international grocery store chains from using restrictive covenants to prohibit new competitors in their area.

“Woonsocket is a great example of what happens when a grocery store enacts a covenant,” Murray said, pointing to the city’s reduction to a single grocery store.

The May 1 letter from U.S. senators to the Federal Trade Commission cited Woonsocket specifically as a community harmed by the practice. The letter documented how anti-competitive restrictive covenants have shut out grocers from operating in locations where consumers would have otherwise frequented their stores and benefited from their presence. Federal lawmakers requested a nationwide investigation into how these provisions concentrate market power and eliminate consumer choice.

Chains Deploy Subsidiaries to Acquire Strategic Properties

Murray described how Stop & Shop acquired areas along Diamond Hill through subsidiaries, placing restrictive covenants to eliminate competition. Companies use shell corporations to buy up properties, masking their identity while securing legal restrictions that prevent rivals from opening. The tactic operates as corporate warfare, with neighborhoods caught in the crossfire as grocery options vanish.

“It is a sneaky tactic to buy up these properties through subsidiaries and put restrictive covenants on them to keep out competition. It creates a food desert, which is what we have here in Woonsocket,” Murray said.

The practice transforms real estate into strategic weapons rather than community assets. Companies that no longer operate in an area continue to control what businesses can serve residents, prioritizing corporate interests over public need. Rhode Island’s new law dismantles this system, joining a small but growing movement to restore grocery competition and improve food access in underserved communities.