‘Retaliatory measures’: Alcohol companies suing LCBO, have alerted competition bureau

Several prominent alcohol conglomerates are suing the Liquor Board of Ontario (LCBO) over the alcohol retailer’s 2023 decision to penalize suppliers for non-compliance with “contradictory pricing policies.”

Numerous spirits suppliers, including Crown Royal, Canadian Club, JP Wiser’s, Forty Creek, Bacardi rum and El Jimador Tequila, filed a court application with the Ontario Superior Court of Justice to declare what Spirits Canada called a “controversial LCBO-pricing term invalid and unenforceable.”

The suppliers have also alerted the Competition Bureau of Canada, claiming that the LCBO’s enforcement of its pricing term is “an abuse of dominance with major anti-competitive implications for pricing and product choice impacting all Canadian consumers.”

“As spirits suppliers, we have always appreciated our longstanding strategic partnership with the LCBO,” Cal Bricker, President and CEO of Spirits Canada, said in a statement. “We are disappointed that we have had to refer the LCBO’s contradictory policies to the courts, but at this time, and amid retaliatory measures by the LCBO, we have been left with no other options.”

In May, Spirits Canada threatened to remove various alcoholic products from LCBO shelves. What followed was an unprecedented strike between the LCBO and its employees, which only ended this week, as LCBO stores reopened to the public on Tuesday.

In a news release issued on Wednesday, Spirits Canada said that for months, suppliers have been trying to resolve the issue of the LCBO suddenly levying what it alleges is “tens of millions of dollars” in penalties for alcohol products sold more than a year earlier.

Spirits Canada represents almost 70 per cent of the spirits products sold by the LCBO and nearly 35 per cent of all products sold by the LCBO.

The LCBO called the claims “inaccurate and highly misleading to consumers.”

“The fact is that when suppliers do not honour our legal agreements on consumer protection, the only people that lose are Ontarians. By breaching the terms contained in our Purchase Order Terms and Conditions that require that LCBO receive the same or lower price as other Canadian liquor jurisdictions, LCBO customers are unfairly made to pay more for beverage alcohol than other consumers across the country. These are not retroactive tax bills, fines, nor penalties, but rather pricing chargebacks levied in accordance with terms of our long-term contracts,” the LCBO said in a statement.

“Our position remains that it would not be fair to let a few suppliers gouge Ontario consumers.”