Pubcos raise a glass to OFT

Pub companies across the UK are toasting victory after the Office ofFair Trading ruled the controversial beer-tie is perfectly legal.

But the news was a blow to the Campaign for Real Ale (Camra), which believes the rule that forces pubco licensees to buy beer from their landlord only was contributing to the worrying levels of pub closures across the country.

Central to Camra’s complaint was the fact that pub companies may charge licensees more for their beer than the licensee might be charged elsewhere.

Camra had used its status as a designated consumer watchdog to make a “super-complaint” to the OFT over the issue back in July, but the OFT said: “Having examined the issues raised in the super-complaint, the OFT has not found evidence that supply ties are resulting in competition problems that are having an adverse impact on consumers.”

Mike Benner, Camra’s chief executive, said the tie coupled with high rents were pushing up the price of a pint for Britain’s pubgoers and forcing many pubs out of business, with latest figures suggesting as many as 50 pubs per week are going out of business.

Simon Williams, senior director of the OFT’s Goods Group, said: “We understand that our response to Camra comes at a difficult time for the industry, but the evidence indicates that consumers benefit from a good deal of competition and choice within this sector.”

Camra is urging Lord Mandelson to overrule the OFT by referring “anti-competitive and unfair tie arrangements of the large pub operating companies” to the Competition Commission for an urgent investigation.

News of the OFT ruling has inevitably been welcomed by the pubcos. A spokesman for Enterprise Inns said: “We are delighted. The tie has now been reviewed no fewer than 25 times since 1966, 21 in the UK and 4 in the EU. On every occasion it has been concluded that the tie was fit for purpose.”

Meanwhile the Business and Enterprise Committee (BEC) has announced plans to re-convene before the end of the year to look at submissions from groups such as the British Beer & Pub Association which aim to provide a better deal for tenanted pubs.

Back in May a BEC report recommended a top-to-bottom review of the beer tie arrangements by the Competition Commission and called for “urgent action by the Government”.

Alan Lodge, 28.10.2009