Could another court challenge be in the works? The day following the Alberta government’s announcement to scrap a tiered mark-up system and establish a grant program for Alberta-based breweries (read my analysis here), B.C. and Saskatchewan breweries have started complaining about the new policy, according to a Calgary Herald story released this morning (read it here). (Full disclosure – and obvious if you read the article – the reporter called me for comment as well.)

That representatives of breweries in the two provinces are complaining about the change is not surprising. Their business interests are being negatively affected and so, of course, they are opposed to the change. They are threatening increased prices, which is not only likely but, to be frank, the point of the policy. That wasn’t particularly noteworthy for me.

It was this quote that caught my attention: “It would be offside in two areas: the New West Partnership agreement, and also I believe with the Constitution Act”. these words come from Michael Micovcin, CEO of Saskatoon’s Great Western Brewing.

After the last fall’s changes which restricted lower mark-ups to breweries in Alberta, B.C. and Saskatchewan (read here ), Toronto’s Steam Whistle launched a lawsuit arguing the rules were unconstitutional as barriers to internal trade (read here). This week’s changes were, in part, aimed to address Steam Whistle’s complaint.

That Great Western is already sabre rattling around the same issues make me wonder if they might be planning a similar lawsuit? I have not spoken with anyone from GWB, nor if I did would I expect them to tell me their plans. I imagine that less than 48 hours after the announcement they don’t even know yet. But that is the kind of the language that can often be a precursor to a lawsuit, and it got my spidey-senses tingling.

I suspect this issue will not go away anytime soon for the government. Which, I guess, is what they were desperately hoping would happen.

My opinion – and be clear I am not a lawyer – is that two key things make this issue different than the Steam Whistle case (of which there was no certainty would win, by the way). First, the whole purpose of removing the tiered mark-up was to ensure that every brewery has the same rate apply to their beer, regardless of where they brew it. Equal treatment: a key principle in free trade deals. There are no restrictions (in my understanding) to governments offering subsidies or grants to local companies to promote their development. Ontario does it all the time for its brewers. It is a much harder legal argument to claim that Alberta is somehow restricting internal trade under this policy than under the old one.

Second – and more importantly for me – any attempt to somehow claim that a government grant is a trade barrier leaves the complainants vulnerable to a counter argument. If offering direct financial support to local breweries is a trade barrier, what do we call policies that give government agencies the power to determine (and restrict) which beer are allowed to be sold in the province? Or policies that give preferential treatment on store shelves to local products?

Liquor Board import controls directly restrict which beer can enter their market. To my eye, that is a more direct violation of internal trade than a province with an open border but a policy of offering grants to its breweries. Breweries in other provinces have grown in an environment that has restricted the degree of competition they must face. How would Ontario breweries have fared if they had to deal with the couple thousand import SKUs Alberta breweries have had to contend with?

To be clear, I am not particularly opposed to those policies; I believe governments have a role to play in fostering and developing a local beer industry. What is starting to really bug me, as we enter round two of this debate, is the hypocrisy of accusing Alberta of being “protectionist” when it is the most open province in the country in terms of imports. Breweries that benefit from significant barriers erected by their own governments should be very, very careful what action they take. They may open a can of worms they will come to regret.

In particular in the shadow of the New Brunswick court challenge, which could throw provincial border controls into chaos.

I fully suspect we have not heard the last of this. I will keep you posted.