Champagne corks are being popped at Queen’s Park after the federal Competition Bureau endorsed the Progressive Conservative government’s plan to liberalize beer and wine sales in Ontario.

“Ontario consumers and businesses can benefit from a less restrictive system – one that provides retailers an equal opportunity to participate, encourages price competition, and supports proper wholesale pricing,” wrote the bureau’s commissioner of competition Matthew Boswell to Finance Minister Rod Phillips.

“I commend your efforts to review liquor policy in the province and to ensure a level playing field for businesses and greater choice and lower prices for consumers,” Boswell said in a letter to the treasurer Tuesday.

“Increased competition generally leads to more choice, greater innovation, and lower prices. As Canada’s competition expert, the Competition Bureau supports the ... recommendations that aim to provide retailers equal opportunity to sell their products, encourage price competition, and support proper wholesale pricing,” he continued.

“While acknowledging the need to balance policy concerns such as public health and safety with competition, I believe a less restrictive system that allows more retailers to compete on price can offer Ontarians greater convenience and access to a wider selection of products, particularly for those who live in rural and remote communities.”

Boswell’s letter was encouraging news for Premier Doug Ford’s government, which has been pushing to expand the sale of beer and wine into corner stores and big box outlets.

“We welcome the support from the commissioner, who agrees that greater competition will lead to greater choice and fairness for people in Ontario, and even more economic opportunities for retailers,” Phillips told the Star.

“Our government supports a responsible approach to alcohol sales and we look forward to continuing discussions with our stakeholders,” the finance minister added.

The Tories unilaterally cancelled a 10-year accord with the major brewers — signed by the previous Liberal government in 2015 — that limited the number of supermarkets where beer and wine could be sold to 450 locations.

Despite that, negotiations are continuing with the Beer Store, which is mostly controlled by Molson, Labatt, and Sleeman, in a bid to avoid costly litigation.

Under terms of the “master framework agreement” that was to be in place until 2025, taxpayers could be on the hook for $1 billion in financial penalties paid to the major brewers.

Ford stressed last month that he’s hopeful “to come up with a great deal for everyone.”

“We want to work with the Beer Store and we want to make sure that we commit to the promise that we made to have wine and beer in the corner store,” the premier said July 23 in Lucan, near London.

“Everyone’s requesting it.”

But the government’s controversial decision to legislate an end to the contract, done by then-treasurer Vic Fedeli days before he was demoted in a June 20 cabinet shuffle, sparked outrage from the United States Chamber of Commerce, the world’s largest business organization with three million members.

“While the provincial government rightfully should pursue policy it deems of benefit to its constituents, it is essential this process be conducted in a manner that ensures the sanctity of existing contracts be honoured,” chamber senior vice-president Neil Herrington wrote in June.

“Our strong concern is that terminating an existing contract, and doing so without compensation ... risks sending a negative signal to U.S. and other international investors about the business and investment climate in Ontario,” warned Herrington.

“This in turn could undermine the constructive work you and your government have done and the case the Ford government has made that the province is open for business.”

The Beer Store has 450 outlets, which is why former premier Kathleen Wynne’s Liberals agreed to limit sales to that many supermarkets. There are more than 1,500 grocery stores in Ontario and thousands more corner shops.

Molson, Labatt and Sleeman are owned by companies based in the U.S., Belgium, and Japan, which means the Ontario legislation exposes Canadian taxpayers to challenges under accord, such as the North American Free Trade Agreement and its forthcoming successor.

The Beer Store is still “pursuing ... legal options” against the Ford government.

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Although any proposed changes would not affect the government-owned Liquor Control Board of Ontario, which will keep its monopoly for the sale of spirits and most wine, the Competition Bureau signalled its concern with the LCBO.

“Under the current pricing scheme for licensees, bars and restaurants do not benefit from proper wholesale pricing and must purchase from LCBO and the Beer Store at consumer-level retail prices. This drives up prices for consumers, as establishments must add a mark-up on the retail prices to generate a profit,” wrote Boswell.

“Further, Ontario’s bars and restaurants are limited to the selection available through the LCBO and the Beer Store. Distribution and warehouse capacity constraints limit the range of products available. This can restrict new and innovative producers’ ability to market their products and limit consumers’ choice.”

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

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