gwblogoAnd Great Western makes three.

There are now three lawsuits (okay, two lawsuits and a trade complaint) against the Alberta government’s new beer mark-up policy. Saskatoon’s Great Western Brewing officially launched a lawsuit yesterday (read one of a few possible media stories here). They join Toronto’s Steam Whistle and Calgary importer Artisan Ales in challenging the new policy. For a background on the policy read here.

Great Western argues the flat rate mark-up combined with a grant for Alberta-based producers amounts to a violation of the Constitution Act as a barrier to trade between provinces. The Alberta government has not officially responded, using the usual “before the courts” defence, but in general their position has been that Alberta has the most open beer market in the country and that the policy is designed to help foster a local beer industry in the province with all the jobs and economic development that come with it.

This development is hardly surprising. I think I actually predicted it when the latest policy was announced. Great Western sells approximately half (I am told) of its beer in Alberta, and they have said that a 24-pack has increased over $6 in price since the change. They won’t release figures, but you can imagine their sales have dropped as a result, especially in the discount segment where many of their beer compete.

I get why they are mad. Just like Steam Whistle (who also had a large portion of their sales in Alberta) and the various importers who try to sell non-local beer to Albertans. Alberta has long been the reliable secondary market, the place where you can easily sell your beer at a decent price, especially if you are a small to mid-sized brewery.

That changed in the last year. And anytime a government tries to make a large change, lots of people are going to be unhappy.

I don’t say that to dismiss the lawsuits or the complaints of those negatively affected by the change. I say that because, well, it is true. Those who are complaining do so because the old system worked for them. Alberta breweries are singing the praises of the new policy because IT works for them. Such is the nature of politics.

I will not attempt to predict the outcome of this lawsuit, nor the other ones. I am neither a lawyer nor a trade expert. However, for the sake of those of you out there, I will offer this analysis.

The crux of all the complaints centre around the argument that the new policy taxes import beer at a different rate than local beer – effectively a trade tariff which is prohibited under NAFTA, the Constitution Act and New West Partnership. Whether that is a case is up to the courts. My guess at the government’s defence is that the same mark-up is applied to every beer sold in the province, regardless of production origin. The grant program for Alberta breweries is framed as an economic development initiative (something allowed under trade deals), and thus legitimate.

The question will be whether the courts agree. The government has explicitly tied the two initiatives, but they are also not the only government to provide economic development grants to their local breweries. Plus, there is something – at least in my mind – to the argument that Alberta continues to have the most open borders in the country. If mark-ups/grants are a trade barrier, are tasting panels, preferential shelf space and import restrictions trade barriers?

As I say, I am not a lawyer, so I don’t offer an answer. As usual in this debate, I advocate a big picture analysis. We need to look at the basket of policies that all provinces have to regulate the flow of beer across borders. Whether the courts share that perspective, I have no idea.

[Edited at 12:30pm to correct that the complaint is based upon the Constitution Act, and not the NWP as initially reported.]