A prolonged battle between beer giants Molson Canada and Miller Brewing Co. over who has the right to sell Miller Genuine Draft in Canada is headed to trial after the companies failed to come to an out-of-court settlement.
The two firms have been at loggerheads over the distribution of the popular beer since early in 2013 when Miller said it wanted to cancel the agreement that allows Molson to market its products in Canada.
The case was set to go to court in December, but at the last moment the companies decided they would try to reach an arrangement on their own. After four months, however, the talks have broken down and the case will head back to Ontario Superior Court once a trial date has been set.
When asked about the status of the talks, both Molson and Miller issued the same statement Tuesday saying: "The parties have been engaged in settlement discussions but have been unable to reach a settlement at this time. Therefore, we are asking the court to schedule a trial date for the matter to be heard."
Molson has had the exclusive rights to distribute Miller products – including the key Genuine Draft brand – under an arrangement that goes back decades. But Miller wants to end the deal, because it thinks it can do a better job of selling its own beer in Canada.
In January 2013 Miller gave official notice that it wanted to kill the arrangement in six months' time, but Molson said that could not be done under the terms of the contract. Molson went to court to get a temporary injunction to keep the distribution arrangement in place until the merits of the dispute could be heard in a full trial.
In July, a judge granted the injunction, saying Miller had the stronger case on many of the legal issues, but noting that either side might win in a trial.
The key issue in the dispute is the amount of Miller Genuine Draft that Molson has sold in Canada in recent years. From 2010 to 2012, the sales were far below the targets set out in the contract, and Miller says that gives it the right to terminate the deal.
Molson, for its part, says those targets were supposed to be renegotiated. In addition, Molson said in legal submissions, Miller Genuine Draft is a strategic brand in filling out its portfolio of beers, and losing it would cause "irreparable harm."
Molson and Miller are still partners in the United States, where they sell their products through a joint venture called MillerCoors as a means to compete more effectively with arch-rival Anheuser Busch InBev.
The two companies have fought before about their Canadian distribution deal, which has been in effect in one form or another since the 1980s. In 2005, Miller sued Molson to try to kill the contract, suggesting that Molson's merger with Coors had reduced its incentive to promote Miller brands in Canada. After more than a year of legal battles the two firms decided in 2007 to patch up the fight and extend the agreement.
Miller is owned by SABMiller PLC, based in Britain. while Molson is owned by Molson Coors Brewing Co., based in the United States.