Ontario’s Progressive Conservative government has passed a bill on Thursday to prematurely end a beer distribution contract with The Beer Store, a chain of retail outlets selling beer and other malt beverages in the province of Ontario, Canada. The retail chain is mojority owned by three international brewing companies, namely Molson (Molson Coors from the USA), Labatt (AB InBev from Belgium) and Sleeman (Sapporo Brewery from Japan).
In some sort of a monopoly with only a few exceptions, The Beer Store was under Ontario's Liquor Control Act the only retailer permitted to sell beer for off-site consumption in Canada’s most populous province. Therefore it accounted so far for 70 percent of beer sales by volume in Ontario and nearly 36 percent of overall Canadian beer sales.
In 2015, the previous Liberal government of Kathleen Wynne concluded a new contract with the privately owned company which on the one hand partly opened the monopoly for the sale of single and 6 packs of beer at select supermarkets in Ontario but on the other hand extended the distribution contract by another ten years.
This deal was widely criticized as a “sweetheart deal” and one of new Premier DougFord’s electoral promises was to liberalize liquor rules in the province.
“Canceling a contract sends an alarming message to the business community in Ontario and beyond which could potentially deter investment,” Rocco Rossi, chief executive of the Ontario Chamber of Commerce, said in a letter to the provincial government.
However, the bill has not yet been proclaimed into law and the government continues to negotiate with the owners of The Beer Store regarding its plan.
Charlie Angelakos, chairman of the board of The Beer Store, said the company has been negotiating with the government over the last three months and that he was still optimistic to find a mutually acceptable amendment to the current agreement. “Most importantly, these amendments would avoid a protracted legal battle and the significant damages to which the government would be exposed,” Angelakos said.
In the meantime, Ontario “is allowing 87 more grocery stores across the province to sell wine, beer and cider, bringing the total number of grocery store authorizations to 450,” Vic Fedeli, Minister of Finance, announced this Thursday. This increase in “grocery store authorizations” still falls under the terms of the Wynne agreement from 2015.
In March 2019, a class action lawsuit filed against the Beer Store more than three years ago had been dismissed by the Ontario Superior Court. The lawsuit claimed USD 1.4 billion in general damages plus another USD 5 million in punitive and exemplary damages and was filed by a pub owner on behalf of Ontario beer consumers who allegedly paid a surcharge on their beer since June 2000, due to an agreement to allocate the market for the supply of beer in Ontario between the Liquor Control Board of Ontario and The Beer Store.
"We have always believed this case was completely without merit and now the court has agreed," said Angelakos in March. "The case was filled with factual errors and fundamentally misunderstood the way alcohol products are sold in Ontario."