|The Beer Store is one target of a new class-action lawsuit launched by a Burlington pub owner|
A Burlington bar owner has launched a proposed $1.4-billion class-action lawsuit against the LCBO and Beer Store over a secret “conspiracy” to limit competition.
David Hughes, owner of The Poacher, is taking the legal action on behalf of beer-drinking Canadians, according to his notice of action, filed in the Ontario Superior Court on Friday.
“The action arises from a conspiracy to fix, raise, maintain or stabilize prices of beer in Ontario,” the notice reads.
“During the conspiracy period, the defendants participated in illegal and secretive discussions and made agreement relating to prices and distribution areas of beer in Ontario,” it continues.
The allegations have not been proved in court.
Torstar News Service earlier this week broke the story about the secret deal that the provincially owned LCBO and privately owned Beer Sore entered into in 2000.
The agreement sharply restricts the LCBO’s beer sales and in doing so allows the Beer Store to financially profit.
Under the scheme, the LCBO agreed it wouldn’t sell 12-packs or cases of 24 to consumers, and wouldn’t sell two-fours to restaurants and bars. Only the Beer Store would be allowed to sell the larger packs, which cost less per unit.
The LCBO can only sell beer brands carried in its regular stores to restaurants and bars, leaving them with few beer options not brewed by the Beer Store owners.
In the end, it means LCBO customers pay higher prices, the province gets less revenue and consumers are restricted in what they can buy.
In a written statement, Beer Store president Ted Moroz said the retailer plans to vigorously defend itself against the lawsuit.
“The Beer Store hasn’t reviewed a statement of claim. But this suggested lawsuit is complete nonsense. Anyone who suggests otherwise is deliberately misleading Ontario consumers. We will fight it with full force,” he said.
Moroz argued that the Beer Store does not set prices.
“Each brewer who sells in the Beer Store independently sets their own prices, which are approved by the LCBO on a weekly basis,” he said.
He went on to say that every province in Canada has the legal right and jurisdiction to regulate alcohol sales, which is what Ontario has done in this case.
The LCBO is not yet prepared to comment on the legal action, said spokesperson Heather MacGregor.
“Our legal counsel has not yet had the opportunity to review it,” she said.
The Beer Store is owned by AB Inbev of Belgium, U.S.-owned Molson-Coors and Japanese-owned Sleemans. The deal was struck by the former provincial government led by Mike Harris and the Liberal government has allowed it to continue.
Finance Minister Charles Sousa said he is looking into the deal and could decide to scrap it.
Restaurants Canada, which represents about 30,000 food service businesses, has asked the federal Competition Bureau to investigate.