Michael Hassell says in letter he will challenge ‘unreasonable’ and ‘unfair’ 1927 law that gives The Beer Store its monopoly on Ontario beer sales in 60 days
It’s that time of year again when The Beer Store’s private monopoly in Ontario gets challenged, this time by an entrepreneur keen on opening up a chain of craft brew stores. Michael Hassell sent the provincial government a 60-day notice that he will challenge the law that gives The Beer Store a province-wide monopoly.
For those unfamiliar with Ontario’s Liquor Control Act, The Beer Store is the only retailer allowed to sell beer for offsite consumption, except for on-site breweries and the LCBO. Only 13 per cent of Ontarians are aware that The Beer Store is mostly foreign owned, with outside entities making over $1 billion in profit per year. It is essentially a government-backed foreign monopoly of a popular market, and it should come as no surprise that it is being challenged again.
Hassell is a 34-year-old Toronto lawyer and founder of Barge Craft Beer, a company trying to start up a chain of stores focused on microbrews. Similar stores can be found all over the states and even in some other provinces such as British Columbia.
“Craft brewers make the best stuff. It’s great. But getting it to market is the number one hurdle – they’ve got this legislative monopoly to deal with,” said Hassell. “It really cuts everybody else out of the market”.
The Beer Store is owned by three large companies: Molson Coors, Labatt and Sleeman. All outside brewers that want to sell their product in Ontario must pay The Beer Store’s fees, an arrangement that has come under heavy scrutiny in recent years.
Last year, Ed Clark, a banker and advisor to Ontario Premier Kathleen Wynne, called for Beer Store owners to pay the province a franchise fee in exchange for their monopoly.
He also said the monopoly hurts craft brewers by offering prime store placement for beers from the big three companies, while leaving independent beers where they won’t get much attention.
Last December, Burlington pub owner David Hughes launched a $1.4 billion class-action suit against the LCBO and The Beer Store on behalf of all the provinces beer drinkers. The Beer Store called the suit “complete nonsense,”but the province has promised legislative changes.
The government said it will follow Clark’s advice, whose final report is due in a few weeks.
“I am going to proceed with redesigning and reassessing the Beer Store,” said the province’s Finance Minister Charles Sousa.
“We’re going to maximize the benefits to consumers and protect the industry at the same time.”
The Beer Store has denied commenting on Hassell’s lawsuit, as it’s aimed at the government and thus the corporation is not party to it.
The Beer Store has been trying to appease the growing demand on Ontario brewers. They’ve recently opened up ownership of the company to all Ontario-based brewers, a move that was immediately decried as “window-dressing”, due to the difficulty brewers face in buying out the three multinational owners.
Originally a large co-operative of Ontario brewers that formed in 1927, The Beer Store has been reduced over the years through mergers and acquisition to the three foreign companies that own it today.
Hassell’s lawsuit will challenge the 1927 law that gives The Beer Store its monopoly, arguing in his notice that the monopoly is “an unreasonable restraint of trade, contrary to equitable principles of fairness,” and “detrimental to Ontario’s economy”.