Diageo, Campari, and Other Major Spirits Brands Owe Over $25M USD in Refunds
A coalition of some of the world’s largest spirits suppliers owes over $35 million CAD — or $30 million USD — to the Liquor Control Board of Ontario (LCBO), the Toronto Star reported. A judge ruled that members of the trade body Spirits Canada, including Diageo, Campari, and Bacardi, must refund the LCBO after disobeying the country’s most favorable customer (MFC) clause.
The decision comes after the collective of liquor companies sued LBCO in May 2024 for unfairly enforcing the MFC. The clause requires sellers to offer the lowest possible price on goods to a buyer with the MFC. If a supplier is looking to sell its products to a different buyer at a lower price, the supplier must also offer the lower price to the buyer with the MFC, as indicated by the law.
After the LCBO found Spirits Canada products in Quebec markets at a lower retail price, the government-run group demanded the spirits suppliers fork over $35.9 million CAD in fines. The clause states that a supplier selling products to a different buyer at a lower price must refund the original buyer “to match the lower price without reducing profit margins.”
Spirits Canada members challenged the clause in their 2024 suit in the Ontario Superior Court of Justice and claimed that the LCBO had not enforced the lowest-price clause in a decade and abruptly began imposing it in 2023 after noticing the lower costs in Quebec. The trade body alleged it proposed alternate solutions, but the LCBO responded by issuing the chargebacks. The LCBO countered by saying Ontarians unfairly bore the brunt of the misconduct, having to pay upwards of $40 CAD more than their Quebecois counterparts for certain products.
The coalition lost the legal battle and is now subject to multi-millions in refunds. The judge asserted that the companies understood the legal framework’s implications when they sold their products in Ontario. Spirits Canada entities — which also include Brown-Forman and Corby — account for more than 70 percent of spirits sold in the Canadian province, according to the Spirits Business.
“LCBO acknowledges the decision of the Ontario Superior Court of Justice,” the board said in a statement. “We value the strong partnerships we have built with our suppliers, which are essential to our success and to delivering the best possible customer experience for Ontarians.”
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