OFT says no to beer tie probe

The Office of Fair Trading (OFT) has refused to launch an investigation into the beer prices and rents large pub companies charge lessees.

The Federation of Small Businesses (FSB), which represents the interests of 4,500 publicans, asked the OFT in September 2002 to investigate the beer tie agreements between the giant leased pub operators and their licensees.

Some licensees claim the high prices leave them unable to compete with managed houses. They argue they could buy outside the tie and get a much better deal.

But the OFT has told the FSB it cannot examine its claims because no particular pub companies or leases were included in the submission.

Former Inntrepreneur licensees Jeff and Trisha Luke, who used to run the Crown in Harmondsworth in Middlesex, felt let down by the news.

"We are very disappointed for licensees still in the sector. We were forced out of business by the beer tie agreement. Pub companies are landlords and property people and not brewers. They rip licensees off. The rents are extortionate and the beer prices are too high."

The OFT's decision comes as a long-running High Court battle over the tie nears its conclusion. Former licensee Bernie Crehan claims he was ripped off by Inntrepreneur's restrictive tie agreement.

The outcome of the case, which ended last month, is still to be decided.

A number of licensees who were struggling last year are no longer trading. Gary McClure, former campaigner and Whitbread licensee of the Old Kings Head in Broughton on Furness, Cumbria, sold his pub at the end of 2002 because rising rents and beer prices meant it was no longer viable.

Ted Bruning, editor of the Campaign for Real Ale's magazine What's Brewing, is a supporter of OFT intervention. "Bad practices are having an effect on both the consumer and supplier," he said.

"The market is being distorted and I think that qualifies for an investigation."

But Ted Tuppen, chief executive of Enterprise Inns, said: "I am not in the least bit surprised by this decision from the OFT.

"The beer tie has been investigated through both the British and European Courts and both have found the tie to represent a fair relationship when considering rental levels and all the other features of the agreements between tenants and pub companies."

A spokesman for the FSB said: "We are disappointed that we only heard the outcome after six months and are particularly disappointed that we did not have an initial meeting with the OFT to discuss our concerns.

"We took a conscious decision to use a more general submission rather than a specific complaint in order to protect the identity of our members."

The FSB is currently consulting its lawyers and is looking to submit complaints on specific companies to the OFT for investigation.