Ripping up a deal with The Beer Store could deter investment in Ontario, business group warns
Published Tuesday, June 4, 2019 10:52AM EDT Last Updated Tuesday, June 4, 2019 7:32PM EDT
TORONTO -- The Ontario Chamber of Commerce is warning the finance minister that ripping up a deal with The Beer Store could deter investment in the province.
The Progressive Conservative government tabled legislation last week that would terminate a 10-year contract with The Beer Store in order to allow the sale of beer and wine in corner stores. The deal was signed by the previous Liberal government and permitted beer and wine to be sold in hundreds of grocery stores.
The president and CEO of the chamber said cancelling a contract sends an alarming message to the business community in Ontario and beyond.
"Modernizing the sale of beverage alcohol is an important objective and we support a more competitive marketplace," Rocco Rossi wrote in a letter to Vic Fedeli. "However, breaking a legitimate contract is a short-sighted approach."
When asked Tuesday if he was worried about the move deterring investment, Fedeli noted that Fitch Ratings agency has upgraded its rating outlook for Ontario from negative to stable.
"This came out ... days after we launched our legislation," he said. "The Ontario Chamber of Commerce should join us in supporting consumers, supporting businesses and supporting our craft brewers."
Rossi wrote that his business advocacy group has been supportive of this government, but before the Beer Store deal gets ripped out, he would like to see a comprehensive and evidence-based plan on the future of alcohol sales in the province.
"Our members believe that the government of Ontario must take a strategic -- rather than piecemeal -- approach to alcohol policy, one which aims to serve both the industry and consumers fairly," he wrote.
The legislation is expected to pass Thursday, the day the house is set to rise for a summer break.
Fedeli has slammed the agreement with Beer Store co-owners Molson, Labatt and Sleeman as "sweetheart deal" and a monopoly that is bad for consumers.
Scrapping the deal could trigger steep financial penalties, but the legislation contains provisions to nullify any such costs.
The Beer Store, however, suggested it was not willing to accept voiding any financial claims, saying it will fight the legislation through the courts.
NDP Leader Andrea Horwath said it is "shameful" for Fedeli to rip up a contract after he railed against the Liberals for a costly decision to cancel gas plants.
"You can't tear up contracts with the private sector as a government then expect investment to be stable in our province," she said.
When the brewers signed the deal in 2015 they also agreed to spend approximately $100 million on capital investments in Beer Store locations, to freeze prices on most Labatt and Molson products for a year and were required to give more shelf space to small brewers.
The deal also allowed the Beer Store to keep the exclusive right to sell 24-packs and most 12-packs in the province, while grocery stores would only carry six-packs. The agreement also opened up ownership of The Beer Store to smaller breweries.