Pubcos off the hook on beer tie
The beer tie is set to continue after the Trade and Industry Select Committee's lengthy investigation found it should remain.
Pubcos were taken to task on a series of issues but the opinion of the committee was that abolishing the tie would not benefit the industry, a decision that is likely to disappoint tenants but please pubcos.
The detailed report recommended that services were tightened up but it did not recommend legislation and also praised Punch and Enterprise for the "extremely thorough" information they supplied during the application process.
Martin O'Neill, chairman of the committee (pictured), said at the launch of the report: "The immediately quantifiable cost of the beer tie is usually balanced by the benefits available to tenants.
"It is not clear that removing the beer tie would make tenants better off."
The Office of Fair Trading was among those targeted in the report specifically over its definition of the public house market and its investigation of beer distribution.
The British Beer and Pub Association (BBPA) also came under fire for its voluntary code of conduct, which the committee claimed is out of date. It has suggested it is reviewed immediately.
Meanwhile tenants were picked out for not seeking out enough advice about running a pub and finances before taking over a pub.
Other key points in the report were:
- Pubcos have no competition issues to answer as no pubco is dominant - Enterprise for example has just 15% of the market
- Marketing fees (paid by brewers to pubcos as listing fees) operate against consumer choice.
- Pubcos cannot be obliged to offer pubs a guest beer as this would be against European Union competition law - but 'pubcos should allow more flexibility'
- Pubcos must improve their reputation as landlords
- Pubcos should offer tenants bigger discounts to match free houses and advise tenants of how much discount they themselves receive
- AWP machines - tied pubs are not getting a good deal - the AWP machine tie should be removed
- There should be clearer guidelines for rent valuation
- The removal of all upward-only rent clauses
- BDMs vary from "excellent to dire" - the industry should review support.
Mr O'Neill added: "We are grateful to all those who contributed to our inquiry, especially the large number of tenants who brought their problems with their pubco to our attention."
Related articles:
Committee targets BBPA code (21st December 2004)
Mixed reaction to pubco investigation (21st December 2004)
Trade and Industry Committee criticises CAMRA (21st December 2004)
MP quizzed over report (21st December 2004)
