‘Simple’ legal change would bust Beer Store monopoly, lawyer says

Lawyer and craft brewer Michael Hassell is launching an unprecedented legal challenge against Ontario

 A “very simple” legislative tweak would make Ontario’s beer market more competitive and break up the Beer Store’s controversial monopoly, says a Toronto lawyer and craft brewer.

This week, Michael Hassell sent the government a 60-day notice that he intends to launch an unprecedented legal challenge to Ontario’s 88-year-old law that grants the Beer Store a virtual monopoly in the province. He says a couple of small changes to existing legislation could grant retail licences to other merchants, which would benefit the government, consumers, and craft brewers alike.

“You tweak the Liquor Control Act to say ‘any licensed retailer’ [can sell beer] instead of ‘just the Beer Store’ and you go in the Liquor License Act and you establish a new class of license called the beer retail license. That license falls under government jurisdiction and everybody still has to apply . . . It’s actually funny how simple the solution is.”

The Beer Store, more formally known as Brewers Retail, is under fire after a Toronto Star investigation exposed its so-called “sweetheart deal” with the Ontario government that grants a near-monopoly to the predominantly foreign-owned chain. It’s also now the target of a $1.4 billion class-action lawsuit and Premier Kathleen Wynne’s government is voicing its intent to review and improve the current retail situation.

Much of the criticism levelled at the Beer Store comes from craft brewers, like Hassell, who say the existing framework essentially denies them a piece of the Ontario beer market. Brewers wanting the product sold in the Beer Store pay a $2,800 fee, plus another $280 per store where they want the product listed.

Hassell, who owns the fledgling Barge Craft Beer company, says its “outrageous” that brewers have to pay the Beer Store just to get their product listed there and likened the Beer Store’s recent offer to open up a minority share to craft brewers to “putting lipstick on a pig.”

 He hopes his notice will motivate the government to make changes on its own, but feels the law is on his side if he must follow through with his lawsuit.

 “There’s a lot of judicial hostility to anything that stops competition without justification,” he says.

 Hassell expects the Beer Store to fall back on the Regulated Conduct Doctrine, which allows some industries leeway for regulated practices that would otherwise be illegal under the Competition Act. He adds beer sales could still be easily regulated, so the RCD wouldn’t apply.

 “The government can still pass regulations governing beer sales, can still tax beer sales, so it still falls under government control,” he argues.

Whether he goes to court or not, he expects his legal challenge to make a positive change for the province, pointing to the public benefits of increased competition.

“An Ontario consumer is going to pay a better price, they’re going to have a better choice,” he says. “There’s got to be a better way than the Beer Store.”

 

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