Starting in late 2023, the Liquor Control Board of Ontario (LCBO) has begun requiring suppliers of wine and spirits to declare the FOB (Free on Board) price offered to other provincial monopolies in Canada to verify that prices do not are lower than those offered at the LCBO. This request is based on the clause “No price discrimination” present in the Terms and Conditions of the LCBO purchase orders. The clause states that suppliers must not sell products at a higher price than those offered to other government entities in Canada. If suppliers violate this clause, they must pay the LCBO the difference in price.
The pricing policies in the various provincial monopolies are different and influenced by many factors external to the producers. For example, in Ontario there is a minimum price policy that is not present in Quebec, causing prices in Ontario to be naturally higher. This creates an inevitable disparity. Furthermore, the LCBO’s request to disclose FOB prices could violate the confidentiality of contracts with other provincial monopolies, creating legal and competitive problems.
The LCBO has begun retroactively withholding chargeback amounts deemed due for the past fiscal year, recently expanding this practice to all SKUs sold in the most recent fiscal year. Companies are receiving payment requests for exorbitant amounts, calculated not on FOB prices, but on consumer prices. Initial attempts at dialogue with the LCBO, carried out by local trade associations and individual companies, were unsuccessful.
If this practice is not reviewed soon, there will be serious consequences for the marginalization of the entire sector, not only in Ontario but also in other provinces. While not directly discriminatory against imported products, this policy harms all operators, especially those who have made significant investments in this market over the years. It is essential that the LCBO reconsider this policy to avoid further economic harm to companies and promote a more equitable and sustainable market for all wine and spirits suppliers in Canada.
