The brewer of Mountain Crest beer said in the lawsuit that Anheuser-Busch Inbev and Molson Coors Brewing Co. had an arrangement with the Ontario Liquor Control Board restricting the sale of other U.S. beer in Ontario. That, the company says, violated the Sherman Antitrust Act because it was a conspiracy in restraint of trade.
About 70% of sales at LCBO stores are ABI and Molson Coors products, while the two beer companies own Brewers Retail Inc., a cooperative that has over 450 locations doing business as The Beer Store.
The suit was filed in the U.S. under the Foreign Trade Antitrust Improvements Act of 1982 that authorizes causes of action for American businesses under American antitrust laws for lost export sales, even if the conspiracy took place in foreign commerce.
“Plaintiff’s injury is precisely the sort that the antitrust laws were intended to forestall; namely, two dominant businesses using their market power to stifle competition,” the complaint states. “Defendants’ conduct was within the flow of, was intended to, and did, in fact, have a direct effect on the export commerce and export trade of brewers in the United States.”
Mountain Crest has been exporting Boxer to Ontario since November 2009, but growth there has not matched that of other markets, despite a $1 million television advertising campaign, the lawsuit contends. Mountain Crest also paid $631,797 to get its products in 440 TBS locations.
But unlike normal stores, most TBS stores have no shelving and only lists inventory on a wall. Once an order is placed, products roll out on a conveyor belt, which “”discourages customer shopping and limits competition to brands the customer is already familiar with,” the lawsuit contends. Some TBS stores do have cold boxes for single can.
Among the restrictions in the agreement with LCBO:
- LCBO would only sell six-packs, so American brewers couldn’t export beer to Ontario in 12- or 24-packs, except for sale in TBS stores.
- “Pack up pricing” under which consumers could buy four individual six-packs and receive the same discount as it they had purchased a 24-pack case.
- LCBO wasn’t to sell to restaurants and bars any many brands not carried in its stores.
The two defendants didn’t immediately respond to our request for comment.