The influence of “pubcos” – huge leased pubs groups such as Enterprise Inns and Punch Taverns – is not a threat to competition in the sector, an influential committee of MPs has today ruled.
The investigation into the industry by the Trade and Industry Select Committee, published today, also argued against abolishing the exclusive purchasing obligations on tenants – the so-called beer tie – demanded by pubcos.
The beer tie is the basis on which pub rents are calculated and, the committee suggested, its abolition might in fact lead pubcos to raise property rents as a compensation for loss of income from beer sales.
“If brewers were free to supply all public houses on a wholesale basis it is possible that major brewing companies could achieve a dominant market position to the detriment of individual public house operators,” the committee concluded.
But the MPs also identified significant unrest and unhappiness among landlords with the service provided to them by their pubco.
“All pubcos should be open with their tenants or prospective tenants about the way in which rents are calculated, about how the beer tie will operate in their particular circumstances and about what the contractual obligations are on both parties,” the committee stressed.
“A tenant should never be forced or choose to enter into an agreement without taking proper independent professional advice about the basis of the pubco’s offer and the significance of the commitment they are asked to undertake,” it added.
And while it argued the current voluntary code of practice followed by the industry on the granting and operating of leases generally seemed to be working, it was something the Government needed to watch closely, the MPs warned.
“At this stage we do not think a legally binding code of practice necessary, but if the industry does not show signs of accepting and complying with an adequate voluntary code then the Government should not hesitate to impose a statutory code on it,” it said.
Mark Hastings, director of communications at the British Beer and Pub Association, described the ruling “as great news for our customers and good news for the industry as a whole”.
by Nic Paton
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