Independent grocers ask Competition Bureau to investigate alcohol sales requirements in Ontario
Ontario’s independent grocers are calling on the Competition Bureau to investigate the province’s alcohol sales expansion for possibly stifling competition.
As of Oct. 31, licensed convenience, grocery and big-box stores can sell beer, wine, cider and ready-to-drink beverages under Premier Doug Ford’s fast-tracked rollout.
But the Canadian Federation of Independent Grocers says smaller retailers face a host of barriers under the province’s plan—particularly “extremely prescriptive” recycling requirements.
So far, only 5.7% of grocers in Ontario have applied for licenses to sell alcohol.
READ: LCBO provides new data on c-store beverage alcohol orders
In a letter to Competition Commissioner Matthew Boswell sent Tuesday (Nov. 5), CFIG senior vice president Gary Sands asked the bureau to investigate elements of the plan that put independent grocers at a competitive disadvantage.
“The plan was touted as providing more choice and convenience for consumers, while augmenting and fostering more competition by allowing all convenience and grocery stores to sell beer, wine and cider,” Sands wrote. “The reality is that measures in the plan erect barriers to entry for Ontario’s independent grocers that otherwise would wish to apply for licenses to sell these products.”
READ: 'We feel hoodwinked': Ontario grocers wary of new recycling rules with alcohol sales
Notably, Sands says new recycling requirements laid out by the LCBO only two weeks ago require grocers to accept empties—even from brands that those retailers don’t sell—as well as plastic rings, bottle caps and wine works.
Grocers are then required to clean and sort all empties for The Beer Store to pick up, for a to-be-determined fee.
The Beer Store—which has been granted the exclusive right to pick up empties—will receive 16 cents per container.
“The excessively prescriptive recycling requirements make it all but impossible for most independent grocers, with a smaller retail footprint, to reasonably contemplate applying for a license. The challenges of infrastructure and costs are insurmountable. This puts the independent grocer at a competitive disadvantage,” Sands wrote.
Convenience stores have been exempted from these requirements—another element of the plan CFIG says puts independent grocers at a disadvantage.
The Ontario Government has recently indicated that it will allow grocery stores to negotiate “alternative agreements” that can exempt them from the requirements, but Sands pointed out that small grocers don’t have the leverage to negotiate with The Beer Store.
Sands also questions why the LCBO is not subject to the same recycling requirements.
“Independent grocers who, in good faith, signed 10-year contracts with the LCBO to sell beer, wine and cider, were told these contracts had been overridden and would not be honoured. This also seems to be an unfair exercise of a dominant position in the marketplace,” Sands added. “Conversely, to break the existing Master Framework Agreement between The Beer Store and the Ontario Government, several millions of dollars were paid to The Beer Store by the province.”
