___________________________________________________________
About
LCBO-
LCBO
(Liquor Control Board of Ontario) is an Ontario government enterprise and one
of the world’s largest buyers and retailers of beverage alcohol. Through more
than 620 retail stores, catalogues and special order services, it offers more
than 20,000 products annually to consumers and licensed establishments.
Type
|
Crown
Corporation
|
Industry
|
Retail
(Department & Discount)
|
Founded
|
1927
|
Headquarters
|
Toronto,
Ontario
|
Products
|
Liquor sales and distribution to
both consumers and businesses
|
Revenue
|
$4.3
Billion CAD as of 2010
|
LCBO accounts for 100% of all legal liquor sales in Ontario
and 34.1% of alcohol sales.
Previous
& Current Monopoly Characteristics of LCBO-
- Sole seller of liquor in Ontario
- No viable substitutes exist in Ontario
- Have considerable control over price
- Downward sloping demand curve
- Legal barriers to entry
- Non price competition as no competitors in the liquor market in Ontario exist
How LCBO’s
Achieved Monopolistic Power-
Legal
Boundaries- Licenses & Permits:
- Licence or permit required:(1) No person shall keep for sale, offer for sale or sell liquor except under the authority of a licence or permit to sell liquor or under the authority of a manufacturer’s licence.
- Soliciting orders:(2) No person shall canvass for, receive or solicit orders for the sale of liquor unless the person is the holder of a licence or permit to sell liquor or unless the person is the holder of a licence to represent a manufacturer.
- Delivery for fee:(3) No person shall deliver liquor for a fee except under the authority of a licence to deliver liquor.
- Exception:(4) Subsections (1), (2) and (3) do not apply to the sale or delivery of liquor by or under the authority of the Liquor Control Board of Ontario under the Liquor Control Act. R.S.O. 1990, c. L.19, s. 5.
- Licence required, ferment on premise facility:(5).1 No person shall operate a ferment on premise facility except under the authority of a licence to operate such a facility. 2006, c. 34, s. 16 (4).
This prevents other corporations & industries from entering
the liquor market in Ontario leaving LCBO as the sole seller. With the lack of competition in the liquor market, LCBO then has the power to control and manipulate prices to an extreme extent with no feasible substitutes or competitors. Thus accounting for LCBO’s mild downward sloping demand curve, as the demand of consumers are strictly reliant on LCBO’s supply of this exclusive product/market.
With the exclusivity of the liquor market, LCBO has achieved significant and economics success. See the following chart of LCBO’s previous dividend breakdown:
Year
|
Dividend
– Not including Taxes (Billion $)
|
%
Increase (+) / Decrease (-)
|
2008-2009
|
$ 4.55
|
N/A
|
2009-2010
|
$ 1.39
|
- 30%
|
2010-2011
|
$ 1.55
|
+ 9.9%
|
Conservation of LCBO’s Monopolistic Power-
Since founded 1927 LCBO has maintained its monopolistic power through the strict unchanging laws stated above preventing (retail) sales of liquor products in Ontario outside of LCBO without a licence/permit.
Additional Information-
http://www.youtube.com/watch?v=LJG-1IVqpws
Work Cited-
"LCBO | About The LCBO." LCBO.
LCBO. Web. 12 Apr. 2012.
<http://www.lcbo.com/aboutlcbo/annualreport2010.shtml>.
"LCBO | About The LCBO." LCBO.
LCBO. Web. 12 Apr. 2012
<http://www.lcbo.com/aboutlcbo/index.shtml>.
"LCBO | About The LCBO." LCBO.
LCBO. Web. 12 Apr. 2012.
<http://www.lcbo.com/aboutlcbo/todayslcbo.shtml>.
"Liquor Control Board of
Ontario." Wikipedia. Wikimedia Foundation, 04 Dec. 2012. Web.
12
Apr. 2012.<http://en.wikipedia.org/wiki/Liquor_Control_Board_of_Ontario>.
"Liquor Licence Act, R.S.O. 1990,
C. L.19." Service Ontario. Ontario. Web. 12 Apr. 2012.
<http://www.elaws.gov.on.ca/html/statutes/english/elaws_statutes_90l19_e.htm>.
"Services For You: Liquor Sales
Licensee." AGCO: Services For You. Alcohol and Gaming
Commission of
Ontario.Web. 12 Apr. 2012
<http://www.agco.on.ca/en/services/licence_apply_LSL.aspx>.
By: Jaime Egan & Tom McMurtry
