Spirit suppliers double down in fight with LCBO, seek court review of 'contradictory pricing policies'

A day after LCBO stores reopened following a two-week strike, the provincial liquor distributor is now facing legal action from some of the biggest distillers in Canada, over what they call "contradictory pricing policies."

Spirits Canada represents 70 per cent of spirits sold in Ontario and includes well-known products like Canadian Club, Crown Royal, Beefeater and Jack Daniel's. The industry lobby group announced Wednesday that some suppliers had filed an application with the Ontario Superior Court to declare a “controversial” LCBO pricing policy – which requires suppliers to sell to the Crown corporation at the lowest price in Canada – “invalid and unenforceable.”

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At the same time, the group said those suppliers had also submitted a complaint to the Competition Bureau of Canada over the practice.

"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,” Spirits Canada President and CEO Cal Bricker said in a news release.

Wednesday’s development builds on a warning issued by the group in May, when it said some popular products could be pulled from Ontario shelves amid the multi-million dollar dispute, described as a “retroactive tax bill” related to products sold in 2023.

At that time, Spirits Canada said that the “clawing back of payments” was based on claims that Quebec’s liquor board had received similar products that are sold in Ontario for a lower price. In Wednesday’s news release, the group argued that the LCBO’s pricing practices are “unreasonable” and “contradictory” as suppliers must meet the minimum pricing requirements (which they said increase every year), but are penalized if Ontario prices are higher than the rest of the country.

For the LCBO’s part, the company said its policy is common and allows it to offer Ontarians competitive pricing. Moreover, it said the “pricing chargebacks” are not fines or penalties, but in line with the terms in its contracts that have “long been in place.”

“Suppliers are aware of this requirement and are responsible for ensuring compliance with this legal obligation,” the LCBO said in a statement issued in March.

To that end, the LCBO said of the 10 per cent of suppliers who are non-compliant, over 80 per cent have acknowledged breaching their contracts and are working with the board resolve the issue.

In an updated statement issued Wednesday, the LCBO said it is aware of the legal action and again called the claims made by the distillers “inaccurate and highly misleading to consumers."