Restaurants Canada has asked the federal Competition Bureau to investigate the “noncompete” deal between the LCBO and the Beer Store revealed by the Toronto Star.

The association claims the deal exposed by Star Queen’s Park columnist Martin Regg Cohn restricts competition and inflates the price of beer in restaurants, bars and pubs.

“We have known of the existence of an agreement for years, but we did not know the depth of the complicity. This agreement fixes prices, territories and products,” James Rilett, Ontario Vice President for Restaurants Canada said in statement Wednesday.

The Competition Bureau could not be reached for comment.

The secret agreement restricts the LCBO from selling beer in sizes larger than six-packs, leaving the more lucrative sales of 12-packs and 24s to the Beer Store. The deal also restricts the LCBO from selling cases of 24 to bars and restaurants, which now can only do business with the Beer Store.

In a statement Tuesday, Jeff Newton, head of Canada’s National Brewers, the industry lobby group that represents The Beer Store in media dealings, was critical of the Star column.

He described the The Beer Store as an efficient operation that doesn’t make a profit but “operates on a break-even basis,” while benefitting consumers as well as big and small brewers. He said the deal with the LCBO was made to “facilitate the orderly modernization of Ontario's beverage alcohol retail system while maximizing revenue to government.”

Restaurant Canada, representing 30,000 businesses in every segment of the food service industry, contends that up until now the Bureau has been unwilling to wade into the issue, but the association now believes the deal, signed in 2000, must be investigated.

“Ontarians need a neutral third party to look into this secretive agreement,” Rilett said.

The association says privatization czar Ed Clark had the opportunity to call “closing time on this sweetheart deal but decided the economics of the Beer Store were more important than the rights of small businesses.”

In the meantime, Restaurants Canada is also calling on the Liberal government to immediately cancel this noncompete agreement.

“The agreement can be terminated at any point, simply by giving six months' notice. If the government were to cancel it today, Ontario consumers would be able to have better service and cheaper prices by the summer,” Rilett stated.