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Saturday, January 18, 2020
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Forget the bread, it’s beer and circuses that work for Ford

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Following last year’s election, Doug Ford moved quickly on one of his major talking points: his buck-a-beer pledge. Two months after taking office, his government lowered the minimum floor price on beer in time to capture some of the summer market.

Ford’s rollback of the former government’s nanny-state proclivities now includes extending the sale of beer to more grocery and corner stores. To do that, he’ll need to rip up a 2015 deal between the Liberals and The Beer Store – the so-called Master Framework Agreement governing beer retailing – which has a multitude of critics up in arms: the brewers are threatening legal action, the unions are warning of job losses and the opposition charges it will cost a billion dollars to undo the deal at a time when the Conservatives claim spending cuts are needed to balance the budget.

“The government cannot extinguish our right to damages as outlined in the Master Framework Agreement. It is critical to understand that The Beer Store has, in good faith, based on a legally-negotiated 10-year operating agreement with the Province of Ontario, invested more than $100 million to modernize its stores and to continue to upgrade the consumer experience,” argues Beer Store president Ted Moroz in a statement this week.

“We have today sent a legal letter to the government and will fight this legislation vigorously through the courts and we remain committed to protecting the 7,000 Ontarians who work at The Beer Store and rely on these jobs to support their families.”

Though the company is more concerned about its profits than its employees, the union makes the same arguments.

“I’ve never seen anything like this in my career as a union representative,” said United Food and Commercial Workers Local 12R24 president John Nock. “We have a government that is now introducing legislation for the sole purpose of destroying the livelihood of over 7,000 Beer Store employees in communities large and small across Ontario and wasting taxpayers’ money.

“Doug Ford promised no one would lose their jobs as a result of his policies,” Nock said. “And now he’s cancelling contracts, creating chaos and kicking good jobs to the curb.  We will fight this government and this Premier to keep our jobs and to save the taxpayers the billions Ford is willing to pay to put beer in corner stores.”

None of that has deterred Ford, whose government this week rolled out the Bringing Choice and Fairness to the People Act (Beverage Alcohol Retail Sales).

The Master Framework Agreement signed in 2015 altered the beer retail model to expand sales to 450 grocery stores along with The Beer Store. The brewers and the union say the deal was intended to provide stability for 10 years, charging the government is no longer acting in good faith.

Ford is no stranger to such criticism, much of it justified in this case. That said, the brewers and government have long conspired against consumers in Ontario, driving up prices and supporting monopolistic practices that have not served the public. Loosening the strings marginally was a good thing – especially after decades of much talk and no action – but no one has a clear claim to the high ground.

The deal Ford is accused of violating stemmed from whistleblower revelations of a secret non-compete agreement between the government-owned LCBO and privately operated Beer Store. The deal’s main goal? Gouging consumers while continuing to funnel corporate donations into political party coffers. It was a tale of corporate manipulation, of politicians on the take. In other words, business as usual.

The deal involved restricting beer sales at the LCBO to six-packs rather than the cases of 12 and 24 that are more popular … and cheaper. In essence, LCBO agreed to hand over a lucrative business to a private, foreign-owned enterprise, driving up prices and foregoing more than half a billion dollars in revenue.

The Beer Store, owned at the time by the three largest brewers – all foreign-owned: InBevSA of Belgium, U.S.-based Molson Coors Brewing and Japan’s Sapporo – had few incentives to make way for small, local brewers. The shift to selling beer in grocery and convenience stores would benefit smaller breweries dependent on a retail channel owned and controlled by their much larger competitors. The Liberal government changes gave small brewers a seat at the table and opened up market access, a welcome development.

Ford’s plan to rip up the Liberals’ face-saving, vote-buying agreement has merit: the private monopoly should be eradicated and more weight given to small and domestic brewers. As well, prices could easily be cut dramatically, particularly once the finances are in order. But the price of doing the right thing may be too high; perhaps it’s a better idea to let the deal run its course if a cost-free legal angle can’t be found. Of course, that doesn’t buy Ford any pseudo-populist cred today – and, after all, that’s the impetus for his actions.

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