LCLB Looks to Change “Tied Houses” Regulation

On January 10, the Liquor Control and Licensing Branch of the BC Ministry of Public Safety and Solicitor General announced on its Web site that it was seeking consultation on new legislation that permits tied houses and related trade practices. The consultation closed on February 15.

In the [consultation paper], the LCLB announced that, “The status quo is not offered as an option because government, through its legislative amendments, has demonstrated its intent to move away from the status quo and deregulate.”

With respect to tied houses, three potential options were offered:
1. Total elimination of tied house prohibitions.
2. Limits on the number of tied houses a corporate entity can own.
3. Permit tied houses with “public interest restrictions.”

The options offered for related trade practices were:
1. Elimination of all restrictions.
2. Eliminate or reduce most restrictions.
3. Streamline some policies and procedures.

Why is the provincial government considering these? The consultation paper offered the following reasons:
* The federal government already regulates business practices through the Competition Act.
* The LCLB’s limited resources might be better spent on public safety priorities.
* Inducements between suppliers and licensees are already quite common (even though they are illegal).
* With 9,000 licensed establishments, it is unlikely a liquor supplier could adversely impact consumer choice.
* The LCLB has approved a number of financial ties between liquor suppliers and licensees involving small wineries and bars.

Given how utterly dysfunctional the liquor control system is in British Columbia, one would think elimination of tied house prohibitions and trade practice restrictions is a good thing. However, the devil is in the details. They cause me to question the intent of the government.

Any talk about public safety in relationship to this issue is a straw man. The rationale for making tied houses illegal in the first place, as provided in the consultation paper, was because the Liquor Inquiry Commission of 1952 found a lack of competition that resulted from brewery consolidation. It took another 32 years before craft brewing resurfaced in this province!

The government states that inducements between suppliers and licensees are already quite common. Therefore, they will only be “modernizing” regulations to make legal what is already accepted practice. In fact, what they are admitting is that neither the federal, nor the provincial government is enforcing the law with respect to tied houses. Is it any wonder, then, that the growth of the craft beer industry in BC has been much slower than in Washington and Oregon, even though the craft beer renaissance began in all three at the same time? That tied houses were also illegal in both states?

I would venture that the reason large brewers are able to capture 85% of beer sales in BC today is because they are dominant in the media, they have the financial clout to gain the best positions in retail establishments, and they have the means to offer the most attractive inducements to licensees. To make the latter legal, will remove the last impediment to what spawned the Liquor Inquiry Commission in the first place. This is not in the public’s interest.

~ Rick Green