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News
OFT reopens pub tie inquiry
The Office of Fair Trading has agreed to reopen its investigation into the legal tie between pub companies and their tenants in the UK.
The OFT has moved to avoid costly legal proceedings with the Campaign for Real Ale (CAMRA), which had lodged an appeal against the watchdog’s decision last year which ruled that the tie does not harm competition in the pub and beer market.
The move allows the OFT time to consider further evidence of anti-competitive behaviour by the UK’s large pub companies.
CAMRA’s super-complaint argued that pub beer prices were being inflated by around 50p a pint as a result of anti-competitive practices by the pub cos.
The beer group was also concerned that this behaviour was restricting consumer choice and leading to chronic under-investment in the UK’s pubs.
CAMRA claims that wholesale prices paid by tied publicans are on average around £20,000 higher per year than would be the case in a more competitive market.
The group calculates that, if beer prices had risen in line with inflation since 1990, then UK consumers would be collectively better off by £2.5 billion a year.
When the OFT originally said back in October that it planned to take no further action in response to the super-complaint, CAMRA called on the UK government to refer the case to the Competition Commission.
The group then followed this move in December with an announcement that it would be issuing a legal challenge to the OFT, taking the decision to the Competition Appeals Tribunal.
As a result of this agreement, the OFT will now conduct an open public consultation into these allegations before reaching a final decision.
During this consultation period, CAMRA will suspend its fundraising appeal for the reform of the beer tie, putting the £8,000 already raised towards legal fees.
Mike Benner, chief executive of CAMRA, said: “We are delighted that the OFT has responded to our appeal by agreeing to conduct an open consultation and I encourage all parties to use this opportunity to submit further evidence of anti-competitive practice.
“We are hopeful that on re-examination of the pubs market the OFT will decide to act against anti-competitive behaviour in order to deliver a fair deal for consumers.”
Gabriel Savage, 09.02.2010