Release: Alberta court to hear important beer appeal

Release: Alberta court to hear important beer appeal

On Tuesday April 9, the Alberta Court of Appeal (ABCA) will hear arguments on the Steam Whistle v. AGLC decision, a case that could have profound implications for both the future of interprovincial trade and for Alberta’s beer consumers.

“What makes this case so important is it marks the first opportunity for a Canadian Appeal Court to apply the Supreme Court of Canada’s recent Comeau decision dealing with provincial free trade,” says Derek From, a lawyer for the Canadian Constitution Foundation, which was granted intervenor status in the litigation.

From says his group intervened in this case, which involves two out-of-province beer companies challenging unconstitutional discrimination against their products, to protect the rights of Canadians in keeping with the original vision of Confederation.

“We are concerned that Alberta views the recent Comeau decision,” says From, “as a roadmap to bypass the important constitutional protections contained in section 121 of the Constitution Act, 1867, which enshrined free trade among the provinces. In our view, that’s what Alberta’s beer policies are trying to do—unduly restrict the constitutional rights of Canadians. So much more than beer is at stake in this appeal. This is a case about the movement and trade of all legal goods throughout Canada.”

The appeal hearing will be held at 10:00 AM in Calgary Courtroom 2 at the Alberta Court of Appeal.

Legal Backgrounder

Canadians’ constitutional right to transact in goods across provincial boundaries is enshrined in section 121 of the Constitution Act, 1867. The purpose of this constitutional protection is to restrict the government’s ability to inhibit and encumber the free flow of goods across provincial boundaries. The Government of Alberta’s beer policies have been violating section 121 since October 2015.

Section 121 reads:

All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.

Canadian economists estimate interprovincial trade barriers cost Canadian households approximately $7,500 annually, and the Standing Senate Committee on Banking, Trade and Commerce noted that,

As a fundamental right, Canadians should be able to practise their profession or trade, operate a business whose goods and services can cross provincial/territorial borders, and purchase goods and services both freely and without penalty anywhere in this great country.

The report further stated, “The inability to do any of these diminishes us as a country, and makes citizens and businesses more tied to their region than to their nation.”

Section 121 was at the heart of the CCF’s Comeau case, which made interprovincial trade a matter of national public interest during his 2015 trial and subsequent appeal to the SCC in December of 2017. In its decision, the SCC said that section 121 prohibits provincial governments from impeding the free flow of legal goods within Canada for the sole purpose of inhibiting trade or protecting local industry. That is what is at issue in the Steam Whistle v. AGLC appeal.

Prior to October 28, 2015, Alberta imposed a common graduated mark-up on the beer of all small brewers, without regard to the brewer’s location within Canada.

Then, on October 28, 2015, Alberta raised the mark-up on the beer of small brewers located outside of British Columbia, Alberta, and Saskatchewan to $1.25 per litre. The reason the Government gave was that they wanted to protect the local brewing industry by shielding it from competition from the rest of Canada. This policy violated section 121 and long-established case law from the SCC that no province is permitted to erect a tariff barrier—a fee assessed by weight, volume, or a percentage of value—with the purpose of inhibiting interprovincial trade.

The Canadian Constitution Foundation informed the Alberta government that this policy was unconstitutional, and Ontario brewer Steam Whistle sought and received injunctive relieve from the Court of Queen’s Bench, so the province then devised a second policy to achieve its anti-trade objectives.

On August 5, 2016, Alberta began applying a mark-up of $1.25 per litre to all beer while paying Alberta small breweries a new grant on the sale of their beer in Alberta. Together, the two elements had the same effect on out-of-province brewers as the October 2015 policy did.

Just like the first policy, the intent of the second was to shield the Alberta craft brewing industry from competition by inflating the cost of selling beer brewed elsewhere in Canada.  But far from promoting local jobs and business, which was the government’s justification, these policies have had the opposite effect.

You can read the CCF’s factum here. The original release can be read here.

Image used under CC 2.0 by Ruth Hartnup.