Ontario government to end Beer Store deal despite warnings of steep penalties – BNNBloomberg.ca

Ontario government to end Beer Store deal despite warnings of steep penalties - BNNBloomberg.ca

Ontario to end Beer Store deal, paving way for beer in corner stores

TORONTO – The Progressive Conservative government plans to rip up an agreement with The Beer Store  in order to allow the sale of beer and wine in corner stores, but employees with the alcohol retailer are warning the move will come with a steep cost.

The government tabled legislation Monday that would terminate a 10-year contract with The Beer Store that was signed by the previous Liberal government. The deal permitted an expansion of beer and wine sales to hundreds of grocery stores.

Premier Doug Ford has repeatedly indicated he plans to broaden the sale of beer and wine to corner stores, but he has to break that agreement signed with Beer Store co-owners Molson, Labatt and Sleeman to do so. In explaining Mondays move, Finance Minister Vic Fedeli said the current system is a monopoly that is a bad deal for consumers and businesses.

Premier Doug Ford has repeatedly indicated he plans to put beer and wine in corner stores, but he has to break that agreement to do so. While tabling Monday’s bill, Finance Minister Vic Fedeli said the current system is a monopoly that is a bad deal for consumers and businesses.

The Beer Store and its union have been embarking on a public relations campaign to push back against having beer in corner stores, with the brewers taking out an ad saying they keep prices down with their distribution system, and the union taking out ads warning that cancelling the Beer Stores deal could hit taxpayers hard.

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“It is critical to understand that The Beer Store has, in good faith, based on a legally negotiated 10-year operating agreement with the province of Ontario, invested more than $100 million to modernize its stores and to continue to upgrade the consumer experience.”

“The province’s current beer distribution system is owned by three global giants who were handed a sweetheart deal by the previous government, and who are more interested in protecting profits than providing convenience or choice for average people,” Fedeli said.

When the brewers signed the deal in 2015 they also agreed to spend approximately $100 million on capital investments in Beer Store locations, to freeze prices on most Labatt and Molson products for a year and were required to give more shelf space to small brewers.

The Beer Store and its union have been embarking on a public relations campaign to push back against having beer in corner stores, with the brewers taking out an ad saying they keep prices down with their distribution system, and the union taking out ads warning that cancelling the Beer Store’s deal could cost taxpayers a lot.

In last month’s budget, the PCs announced a number of loosened alcohol restrictions, including allowing alcohol to be served at 9 a.m., seven days a week, letting people drink booze in parks, and legalizing tailgating parties near sports events.

In a statement sent to Global News Monday afternoon, Beer Store President Ted Moroz said the company is reviewing legislative details related to the agreement and is considering legal options.

Ford says he plans to put beer and wine in corner stores, but needs to break that contract to do so and critics have warned that could trigger steep financial penalties for the province.

The government cannot extinguish our right to damages as outlined in the Master Framework Agreement. It is critical to understand that The Beer Store has, in good faith, based on a legally-negotiated 10-year operating agreement with the Province of Ontario, invested more than $100 million to modernize its stores and to continue to upgrade the consumer experience,” Moroz wrote.

Finance Minister Vic Fedeli has called the current system a monopoly that is a bad deal for consumers and businesses.

[The Beer Store] will fight this legislation vigorously through the courts and we remain committed to protecting the 7,000 Ontarians who work at The Beer Store and rely on these jobs to support their families.

The Progressive Conservatives have tabled legislation to end the contract put in place by the Liberals.

The United Food and Commercial Workers local representing Beer Store employees said Monday that the government’s decision could cost thousands of jobs.

“We will fight this government and this premier to keep our jobs and to save the taxpayers the billions Ford is willing to pay to put beer in corner stores,” president John Nock said in a statement.

Today, the government released a report delivered by Ken Hughes, Ontarios Special Advisor for the Beverage Alcohol Review.  It details the inconvenience and unfairness of the current system for everyday Ontario consumers, and identified the agreement with the Beer Store and its private owners as the primary obstacle to achieving a more fair and convenient alcohol retail system in Ontario.   

On Friday, the province’s special adviser on alcohol delivered a report to Fedeli on ways to improve consumer choice and convenience.

The Tories have also announced a number of loosened alcohol restrictions, including allowing alcohol to be served at 9 a.m., seven days a week, letting people consume booze in parks, and legalizing tailgating parties near sports events.

“Its my hope the multinational brewers who own the Beer Store will put the interest of their customers and Ontarians first and join us as we build a modern, equitable system that opens up more places to buy beer while we create a model that also allows small businesses to grow and create jobs,” concluded Fedeli.

#BREAKING: @globalnewsto has obtained the letter lawyers for multiple breweries just sent Attorney General @C_Mulroney in response to @fordnation move to rip up @TheBeerStoreON contract #ONpoli pic.twitter.com/ZjtjWSXzl3

The bill comes after weeks of talks and amid a public-relations battle between the government and the Beer Store over Mr. Fords pledge to allow beer and wine in corner stores, more grocery outlets and big-box retailers. The 2015 master framework agreement between the brewers and Queens Park was negotiated to allow the government of Kathleen Wynne to expand beer sales in just 450 grocery stores, but was meant to stay in place for 10 years. Since being elected, Mr. Fords government also introduced legislation that allows booze during tailgate parties at sports events, and served up buck-a-beer to consumers by lowering the minimum price on a bottle of suds.

The Progressive Conservative government has tabled legislation that would terminate a contract with The Beer Store.

The letter warns that the brewers may sue Mr. Fords government on the basis that the legislative process has been improperly used by third-party interests” or on the grounds that the bill is unconstitutional and constitutes misfeasance in public office. The Beer Stores lawyers warn the government to preserve all records, including texts and e-mails, for a list of officials that includes Mr. Ford and his chief of staff Dean French, and including any communication with industry groups working with the government pushing for the changes, including the Ontario Convenience Store Association and the Retail Council of Canada.

The previous Liberal government signed a 10-year deal with the brewers that permitted an expansion of beer and wine sales to hundreds of grocery stores.

Premier Doug Ford has indicated he plans to put beer and wine in corner stores, but he has to break that agreement to do so and the industry has warned that could trigger steep financial penalties.

Mr. Fords Finance Minister, Vic Fedeli, introduced a bill in the Ontario Legislature on Monday that would terminate the 2015 deal signed by the previous Liberal government with the quasi-monopoly Beer Store, which is primarily owned by the foreign brewing giants behind Labatt, Molson and Sleeman and operates 445 outlets across the province. Negotiations between the government and Beer Store are expected to continue, but Mr. Fedeli is escalating the fight by giving the Progressive Conservatives the power to unilaterally transform a retail network first launched in 1927.

While tabling today's bill, Finance Minister Vic Fedeli said the current system is a monopoly that is a bad deal for consumers and businesses.

The legislation comes after the province's special adviser on alcohol delivered a report Friday to Fedeli on ways to improve consumer choice and convenience.

Premier Doug Ford has indicated he plans to put beer and wine in corner stores, but he has to break that agreement to do so and the industry has warned that could trigger steep financial penalties.

The Tories also announced a number of loosened alcohol restrictions in last month's budget, including allowing alcohol to be served at 9 a.m., seven days a week, letting people consume booze in parks, and legalizing tailgating parties near sports events.

The Progressive Conservative government has tabled legislation that would terminate a contract with The Beer Store. The move would pave the way for beer in corner stores.

Meanwhile, there's been a swift reaction from Labatt Brewing Company Limited and Molson Canada 2005 to the legislation tabled Monday. 

CBC Toronto obtained a copy of a lawyers' letter from Labatt  and Molson putting the government on notice of a potential legal challenge to the beer legislation. Blake, Cassels and Graydon LLP represent Labatt, while Molson is represented by Gowling WLG.

“The province’s current beer distribution is owned by three global giants who were handed a sweetheart deal by the previous government and who are more interested in protecting profits than providing convenience and choice for average people. It’s a monopoly that’s a bad deal for consumers and businesses and is deeply unfair to the people of Ontario.”

In the letter, the lawyers note that the 2015 Master Framework Agreement was negotiated with the province to enhance customer convenience, choice and shopping experience, while ensuring that customers in Ontario can purchase beer at prices below the Canadian average, and to enhance the beer retailing system for all brewers selling beer in Ontario.

"The Bill will destroy those benefits, legislate 7,000 Ontario-based The Beer Store employees out of work and cause billions of dollars in damages … and result in higher costs and prices for consumers," the lawyers wrote.

Doug Ford promised no one would lose their jobs as a result of his policies, Union President John Nock said. And now hes cancelling contacts, creating chaos and kicking good jobs to the curb. We will fight this government and this premier to keep our jobs and to save the taxpayers the billions Ford is willing to pay to put beer in corner stores.

According to the lawyers, their clients are "significant employers" in Ontario and across Canada and have invested significantly in Ontario.

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The lawyers say their clients "reserve the right to commence litigation to challenge the Bill, and seek compensation, including on the basis that the legislative process has been improperly used by third party interests, the Bill is unconstitutional and constitutes misfeasance in public office by certain ministers and officials involved, and such other grounds as may be advised."

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Posted in Ontario