E-Malt.com News article: Canada: Molson Coors files lawsuit to maintain Miller Lite distribution rights in Canada

Molson Coors Brewing Co. said it has filed a lawsuit in Canada seeking an injunction to prevent SABMiller PLC from terminating a pact that gives the brewer exclusive rights to distribute Miller Lite and other brews in that market, 4-traders reported on February, 26.

Molson - which makes Coors Light and Carling - disclosed in a U.S. Securities and Exchange Commission filing that SABMiller's Wisconsin-based subsidiary, known as Miller Brewing Co., had told Molson in December it planned to terminate a license pact between the companies, citing a failure to meet certain volume targets.

Following that conversation, Molson said it filed a lawsuit in Ontario, Canada, requesting an order that Miller "abide by its contractual terms". Molson claims Miller, which in January sent a written notice warning of plans to terminate the pact, breached the terms of the license agreement.

A Molson spokesman declined to comment on the ongoing litigation. SABMiller representatives weren't immediately available to comment on the lawsuit.

Canada is an important market for Molson, a region where it is the second-largest brewer by volume and commands 39% of the market. Molson sells its own products in that region as well as other brews under licensing pacts, including Heineken NV's namesake brand and Amstel Light and SABMiller's Miller Lite, Milwaukee's Best, among others.

But the Canadian beer market is mature and competition is aggressive, as major brewers, foreign companies, and craft brewers fight for market share. Molson reported beer sales in the region dented last year by a 20% beer excise tax increase in Quebec and the National Hockey League lockout, which ended in January.

In Molson's SEC filing, the company said it plans to "vigorously assert and defend our rights in this lawsuit," but conceded the company can't predict the outcome of the litigation, including any possible future asset impairment costs.

Molson did warn the possible termination of the licensing agreement could have "an adverse impact on our Canadian volumes."

27 February, 2013