The Ontario law that gives the Beer Store a private monopoly will be challenged in court at the same the time as a $1.4-billion class-action lawsuit against the major breweries and the LCBO is proceeding.

Michael Hassell, a lawyer and co-owner of Barge Craft Beer Distribution, a would-be independent retailer, has given the provincial government 60 days’ notice of an upcoming legal action before the Ontario Superior Court.

Hassell hopes the court will strike down the section of the Liquor Control Act giving Brewers Retail — the formal name of the Beer Store — monopoly status as the only private company allowed to sell beer to the public without brewing it on the premises.

His legal move comes as a class-action lawsuit by Burlington pub owner David Hughes against the Beer Store and the Liquor Control Board of Ontario was filed Monday and is moving forward.

The claim, which alleges a “conspiracy” between the breweries and the government that has not been proven in court, seeks $1.4 billion in general damages and $5 million in punitive and exemplary damages.

It was filed on behalf of Hughes, his pub, The Poacher, and “all persons in Canada who purchased beer in Ontario” since a June 2000 deal between the LCBO and the Beer Store first exposed by the Star last month.

The accord is also subject to a complaint to the federal Competition Bureau from Restaurants Canada, which represents 30,000 restaurateurs and bar owners across the country.

Under the arrangement, the LCBO can sell only six-packs at its 639 outlets, leaving more lucrative 12- and 24-packs to the Beer Store. As well, bars and restaurants must buy directly from the Beer Store at a higher price than ordinary consumers.

The LCBO’s Genevieve Tomney said the Crown agency “is reviewing the claim and will be defending itself in this matter.”

Jeff Newton, president of Canada’s National Brewers, the industry association representing the Beer Store, said the class-action “claim has no merit” because no laws were broken.

“The Beer Store has always operated according to the rules established by the government of Ontario for regulation, sale and distribution of beer in this province,” said Newton.

According to the law, the government has the right “to authorize manufacturers of beer and spirits and wineries that manufacture Ontario wine to sell their beer, spirits or Ontario wine in stores owned and operated by the manufacturer or the winery and to authorize Brewers Retail Inc. to operate stores for the sale of beer to the public.”

That section of the Liquor Control Act, legislation dating to 1927, is the subject of a separate legal action.

“We’d love to invalidate that,” Hassell said Tuesday, noting companies like Barge are prohibited from distributing craft beers under the current law.

“It hasn’t been tested before.

“There is an undercurrent of judicial hostility to these types of restrictions where they’re just blatantly unfair.”

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Beer Store officials would not comment on Barge’s suit because it is directed at the government, not the brewers.

The legal manoeuvring comes as Premier Kathleen Wynne is considering a major revamp to how beer is sold in Ontario.

Mindful of that, the Beer Store — owned by AB InBev, the Belgian parent of Labatt, U.S.-based MolsonCoors and Japan’s Sapporo, owner of Sleeman — last week offered to sell a minority stake in the 448-outlet chain to Ontario craft brewers.

The olive branch has not impressed Wynne’s government.

“We know that changes need to be made at the Beer Store,” said Susie Heath, press secretary to Finance Minister Charles Sousa, who will address the matter in his spring budget.

“The notice received by the government signifies an intention to file more complete ‎documentation within 60 days. ‎Upon completion of filings, the Ministry of Finance and the Ministry of the Attorney General will review the application closely,” Heath said Tuesday.

“Our government asked Ed Clark and the premier’s advisory council on government assets to review all of our core assets, which includes the MOU (memorandum of understanding from June 2000) between the LCBO and the Beer Store,” she said.

Clark, the former chair of TD Bank, said last fall the government wants the Beer Store to pay a “franchise fee” to the government without raising beer prices for consumers.

If they balk, he said that suggests they think monopoly is “valueless.”

“Then give it up and we’ll auction it off and see if people would pay something for it.”

Clarification – January 14, 2014: This article was edited from a previous version that said the lawsuit was certified on Monday.

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