Minhas Craft Brewery’s parent company has filed a lawsuit against Anheuser-Busch InBev and Molson Coors alleging that the two beer giants violated anti-trust laws in Canada. Laid out, the company claims that the two brewing conglomerates effectively worked with the Canadian government to maintain a monopolistic grip on the beer marketplace in Ontario. According to The Wisconsin State Journal, Mountain Crest is seeking unspecified lost revenue and $200,000 in punitive damages.
WHY IT MATTERS
The suit, filed Tuesday, comes a week after the Democratic Party itself called out the beer industry by name in an effort to shine a light on corporate abuses of economic power. As relayed in its newest economic platform, the party specifically makes note of AB InBev’s acquisition strategy in the U.S., but goes further by broadly claiming that the world’s largest beer company is also actively “trying to block craft brewers’ access to the marketplace.” And that’s what’s at issue here.
The complaint itself rests on two points.
The first: Mountain Crest claims that the two brewing conglomerates forged a secret agreement with the Liquor Control Board of Ontario—which owns government-run stores that account for 20% of Ontario’s beer sales—to effectively create a monopoly back in 2000. The two sides accomplished this, the suit alleges, by agreeing to limit what, exactly, the LCBO could sell, and where exactly it could sell it. The Toronto Star first revealed this agreement with the help of a whistle blower in a 2014 expose.
This all was compounded by point two: AB InBev and Molson Coors own 98% of The Beer Store, an outlet chain that itself reportedly accounts for the other 80% of all Ontario beer sales.
Meaning, as The Beer Store expanded, carrying with it its preferences for AB InBev and Molson Coors products, the LCBO, which was more likely to carry other brands, essentially retreated. Why the LCBO might be willing to cede ground isn’t entirely clear, but The Star put forth one commonly held belief in its bombshell of a story:
“A former interim leader of the Progressive Conservatives before Harris, [former head of the LCBO, Andy] Brandt believes — as many others do — that election campaign contributions by the big brewers motivated the government’s decision: 'That obviously has some influence.'"
All these things combined, Mountain Crest says, served to create an inhospitable marketplace that for years actively limited growth and sales opportunities for other brands—namely, its own.
“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 suit alleges. “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 is a Canadian-born business, but because it owns Minhas, it has good reason to be concerned with the fair treatment of imports. In fact, even before it acquired the company in 2006, Mountain Crest had for three years been contract brewing there, and by 2005, 80% of the Wisconsin brewery’s production was being exported to Canada. This agreement was allegedly in place for 15 years after being signed, during which time, Mountain Crest says it made hefty advertising investments and paid more than $630,000 to get its products in 440 Beer Store locations, but still saw limited growth compared to other markets.
Reached by GBH, ABI spokeswoman Gemma Hart says, “We are aware that the lawsuit has been filed and intend to vigorously defend against it.”
Molson Coors declined further comment when reached by The Wisconsin State Journal.