Price fixing by retailers is a dastardly practice punishable by law. So why do we allow our national and provincial governments to get away with it?
You would think it is good news for consumers that a few select grocery stores in Ontario are now permitted to sell beer. But you would be wrong.
The Ontario government’s decision to allow beer sales in some supermarkets is an empty, almost meaningless gesture, shamelessly presented by the government as a favour to beer drinkers. The Wynne Liberals are doing consumers no favour.
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What’s the point of adding a few points of sale if the province dictates that every beer retailer in Ontario must charge the same prices?
The sale of beer in Ontario is a near-monopoly. Up to now, most consumers have had only two options for where to buy it. These are The Beer Store, a chain operated by three mammoth beer companies, and the provincial government’s wine-and-spirits stores run by the Liquor Control Board of Ontario.
In extending beer sales to some grocery stores, starting in 2016, the Ontario government announced: “The price of beer will be the same across all retail outlets – grocers, the LCBO and The Beer Store.” The government says on its website: “Prices will remain below the Canadian average while improving convenience and increasing choice to customers.”
Even if the government is truthful in saying Ontario beer prices are below the Canadian average, that’s not saying much. Most other provinces encourage similar gouging of consumers in the sale of wine, beer and liquor.
It’s outrageous that the provincial government is conspiring with big beer companies, and now grocers, to fix prices. You can’t blame the grocers, who have no say in the matter. Big beer companies, on the other hand, seem happy to overcharge their customers. The government has made no serious effort to defend this indefensible practice, beyond claiming – lamely – that high prices deter consumption and curb alcoholism and alcohol-related illness and death.
Right now, about 60 grocery stores across Ontario are permitted to sell beer. In a few years, the number is expected to rise to 450. Among the retailers selling beer are Farm Boy, Loblaws, Sobeys and Walmart.
Ontario’s government recently amended its liquor laws in an apparent attempt to protect itself against any lawsuits claiming it is guilty of artificially inflating prices of beer, wine and spirits.
One change permits the LCBO and The Beer Store to sell to restaurants and bars at higher prices than those charged to individual customers.
Is there anything consumers can do about the Ontario government’s beer price fixing? Well, if you live in Ottawa, you can always slip across the Ottawa River and buy your beer in Quebec.
Can you save money this way? You might, but you will probably not save much – and you definitely will not save as much as some Ontarians who buy their beer in Quebec claim.
Cross-border price comparisons are complicated by the fact The Beer Store and Ontario liquor stores display prices that include federal and provincial taxes, while Quebec stores display prices before tax. Ontario’s combined tax rate is 13 per cent. Quebec’s is higher at 14.975 per cent.
I checked prices of three popular beers: Budweiser, Molson Canadian and Rickard’s Red.
And I compared the Ontario Beer Store’s prices with those at a Costco, an IGA and a Quickie convenience store in Gatineau.
The Gatineau Costco, a shopping club that requires a membership fee of a bit more than $1 a week, had the lowest prices. It was about $2 lower than The Beer Store for a 24-pack of Budweiser or Molson Canadian and about $8 lower for a 24-pack of Rickard’s Red.
In comparing The Beer Store’s prices with those at the Gatineau IGA and Quickie stores, I detected no clear pattern.
Still, it felt good to pick up a 24-pack of Rickard’s Red and know that I had kept $8 out of the hands of those price fixers in Ontario.
Michael Prentice is OBJ’s columnist on retail and consumer issues. He can be contacted at email@example.com.