Nathan VanderKlippe
Northern News Services

Yellowknife (Mar 13/02) - Clear Arctic Springs has declared financial and political war on Northshore Coffee & Water.

Annette Hart is angry that her competition got its start with a government-funded loan. - Nathan VanderKlippe/NNSL photo

The company has slashed its prices by a quarter and its owner is crying foul over a government-funded loan obtained by Northshore, which sells locally-roasted coffee and bottled water. Arctic Springs also sells water, and its sister company Tundra Transfer distributes coffee.

And the debate has caught the attention of a number of MLAs.

Northshore delivers its water for $9 a bottle. Until slashing its prices last Friday, Arctic Springs was selling for $12.

"Since when should my taxpayer money be used to undermine my own venture?" said Annette Hart, co-owner of Clear Arctic Springs.

For Hart, the problem is simple: her company has been around longer than half a decade. Northshore is two months old. Hart says the Northshore loan, which was given by the Business Credit Corporation (BCC), is making business difficult for her.

The BCC is a Crown corporation that dispenses loans of up to $2 million to businesses that have been rejected by the banks. The corporation won't say how much Northshore received.

Now, said Hart, "We have to play hardball and that's what we're doing. We've reduced our prices and we've changed our business plan to look at paying off our loans in the very long term instead of the more realistic shorter term."

Northshore was reluctant to comment, wishing to avoid a media war.

"We knew prices would come down," said Adrian Bell, one of the owners. He added that in a monopoly, such as the Clear Arctic Springs monopoly before Northshore came along, "you can set an arbitrary price until a competitor comes along."

"We're just trying to run a business," said Jordan Harker, another co-owner.

But Hart is angry that the BCC doesn't factor market disruption into its lending criteria.

BCC representatives said the company evaluates market disruption when it dispenses contributions and grants, but not loans. For loans, market factors are addressed in the applicant's proposed business plan.

The Northshore business plan did mention the existence of CAS as a market competitor. But that factor wasn't enough to sway BCC evaluators away from approving the loan.

Political backing

Hart isn't the only one campaigning to change BCC lending rules. A number of MLAs have been pushing for information about current BCC policies.

Range Lake MLA Sandy Lee said she was surprised when she heard government money can be used to boot out existing companies.

"If you read their (the BCC) mandate, it's to create business opportunities and jobs," said Lee. "If you're going to fund another business to do exactly the same, and put the former business out of business or seriously affect its business, then how is that creating business opportunities or employment opportunities?"

Lee was joined by MLAs Brendan Bell and Charles Dent in pressing the matter in committee-of-the-whole on Feb. 27.

"My concern is that ... $2 million could mean an awful lot of damage could be done in the marketplace," said Dent in committee of the whole. "If we are letting the market look after itself, we would make everybody compete on a level playing field," he added.

After asking whether the NWT policy was different from other jurisdictions, Bell seemed satisfied that the current lending criteria are fair. Brendan Bell is Adrian's Bell's brother.

Lee said she will closely monitor a review of the BCC. When asked if she would pursue changes to the BCC policies, she responded, "absolutely."