Molson Coors Brewing Co. is in the midst of a legal spat with its long-time partner Miller Brewing Co., which wants to kill off a licensing agreement in Canada and handle its own beer sales in this country.
Molson Coors has the exclusive rights to distribute Miller products such as Miller Lite, Miller Genuine Draft and Milwaukee’s Best in Canada, an arrangement that goes back decades. But Miller wants to end the marriage because it thinks it can do a better job itself.
The decision to go it alone “reflects our belief that there exists the opportunity to grow Miller’s brands in Canada,” Miller’s managing director for Canada Paul Gurr said in a statement Tuesday. “We see Canada as a country with a rich tradition of beer appreciation and believe we can better serve Canadians’ needs through this transition.”
Miller said it has given Molson Coors Canada the needed six months notice of termination, and set the date for the change at July 22, 2013.
But Molson Coors is resisting the divorce. In a filing with the U.S. Securities and Exchange Commission, the company said it doesn’t think Miller has the right to kill the license agreement. It said it has filed a lawsuit in the Ontario Superior Court asking for an injunction to prevent the termination, and to force Miller to abide by the contract.
Miller, for its part, says it will vigorously fight Molson Coors’s move, and “maintains its right to terminate.”
Molson Coors – or its predecessors – has sold the Miller brand in Canada ever since Molson absorbed Miller’s old Canadian partner Carling O’Keefe in 1989.
But the relationship has hit rocky ground before, and this isn’t the first time the companies have ended up in court over the marketing arrangement. In late 2005, Miller sued Molson Coors, to try to end the contract, saying that Molson’s merger with Adolph Coors had cut into the Canadian company’s incentive to promote the Miller brand in Canada.
That legal battle went on for more than a year, but in March, 2007, the two companies came to an agreement and extended their arrangement.
According to Molson’s securities filing, the current licensing deal has seven years remaining on the contract, and has a carrying value of about $70-million.
Miller and Molson Coors are also partners in the U.S. market, where they jointly sell their products through a joint venture called MillerCoors. That arrangement has been in place since 2008, as a means of competing more efficiently with arch-rival Anheuser Busch InBev.