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A Beer Store outlet in Oakville, Ontario. (Deborah Baic/The Globe and Mail)
A Beer Store outlet in Oakville, Ontario. (Deborah Baic/The Globe and Mail)

Toronto entrepreneur to challenge Beer Store’s monopoly with lawsuit Add to ...

The Beer Store’s private monopoly is facing another legal challenge, this time from an entrepreneur who wants to open a chain of craft brew shops.

Michael Hassell has sent the Ontario government a 60-day notice that he will ask a court to strike down the law that gives the Beer Store a monopoly on retailing beer in the province. The 34-year-old Toronto lawyer is the founder of Barge Craft Beer, a company looking to start up a series of stores specializing in microbrews. Such boutiques are commonplace everywhere from New York to Vancouver, but are banned in Ontario.

“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,” Mr. Hassell said in an interview Wednesday. “It really cuts everybody else out of the market.”

The Beer Store is privately owned by three big beer companies – Molson Coors, Labatt (owned by Belgium-based AB InBev) and Sleeman (owned by Japan’s Sapporo). Any other brewer who wants to sell in its stores must pay the Beer Store fees to do so.

This cartel arrangement is already under heavy fire.

Banker Ed Clark, an adviser to Ontario Premier Kathleen Wynne, last fall called for the Beer Store owners to pay the province a franchising fee in exchange for keeping their monopoly. Mr. Clark also said the Beer Store unfairly hurts craft brewers by offering better placement for beers from the big three beer companies, while relegating independent brands to bottom shelves and hard-to-spot corners.

Then, Burlington, Ont., pub owner David Hughes launched a class-action suit against the Beer Store on behalf of all beer drinkers in the province. Separately, Restaurants Canada, an association of the country’s restauranteurs, complained about the Beer Store to the Competition Bureau.

The government has promised to follow Mr. Clark’s advice and shake up the system. His final report is expected in a few weeks’ time.

“I am going to proceed with redesigning and reassessing the Beer Store,” provincial Finance Minister Charles Sousa said on his way into a cabinet meeting at Queen’s Park Wednesday. “We’re going to maximize the benefits to consumers and protect the industry at the same time.”

Beer Store spokesman Bill Walker said the company will not comment on Mr. Hassell’s suit. The Beer Store is not a party to the action, which is directed solely at the government.

Last week, in a bid to defuse the growing criticism, the Beer Store opened ownership to all Ontario-based brewers. But the move fell flat, with many craft brewers dismissing it as window-dressing. Even if craft brewers bought into the Beer Store, the three big multinational owners would still retain control of the company.

The Beer Store started in 1927 as a co-operative of Ontario brewers. Over the years, through various mergers and acquisitions, the original owners were reduced to just Molson, Labatt and Sleeman, each of which later became part of a foreign multinational.

Mr. Hassell’s legal action seeks to strike down Subsection 3(e) of the Liquor Control Act, which gives the Beer Store its monopoly. In his notice, he argues the monopoly is “an unreasonable restraint of trade, contrary to equitable principles of fairness,” and “detrimental to Ontario’s economy.”

Craft brewers, he says, often create a dozen or more different beers every year, but can get only a fraction of those sold through the Beer Store.

“Consumers would love access to more,” he said. “With a craft beer store, you’d be able to run a humongous selection of beers that is unlike anything Ontario consumers have seen before.”

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