New challenge to pub industry following inquiry

The pub industry has been charged with drawing up a new code of conduct governing the relationship between pubcos and tenants, following last year's Westminster probe.

The challenge has been laid down by the government in its official response to the recommendations of the Trade & Industry Select Committee.

Both the Department of Trade & Industry (DTI) and the Office of Fair Trading (OFT) have backed the findings of the committee, which published its report on December 21 after probing the industry for the previous six months.

Like the committee, both the DTI and the OFT have urged prospective tenants to seek proper advice before committing themselves to a lease.

And the OFT has concluded that there is no evidence of anti-competitive behaviour in the beer distribution market.

"The government agrees that a voluntary code of conduct, developed by the participants themselves, could go some way to resolving concerns of tenants about their contractual relationships with pub companies," said the DTI.

"The government hopes that the industry will respond positively and constructively to the committee's recommendation and engage with the interested parties to find a suitable way forward."

A further recommendation that the government slap a statutory code on the industry if it fails to get its house in order, has been rejected by the DTI, as it believes it does not have the power to do so.

The British Beer & Pub Association (BBPA) said its own code of practice was already regularly updated. "Our code is constantly under review, to keep up-to-date with the developments in the pub trade. We will always ensure our code always reflects the changes in the pub industry," said Mark Hastings, director of communications from the British Beer & Pub Association.

Mr Hastings claimed the response to the inquiry was confirmation that the pubcos had not been abusing their relationship with tenants. "The inquiry found there was no case to answer - this response is reaffirmation of that," he declared.

The OFT, which was asked by the committee to look at its definition of the beer market, said it always looked at market definition on a case-by-case basis. However it revealed it had commissioned a new study of the market definition in the beer retail market for future reference.

"Current evidence suggests the on-trade sector is reasonably competitive and that no one pub company holds a dominant position in the wholesale market for beer - conclusions confirmed by the committee," said the OFT.

The OFT is considering a new inquiry into beer prices and supply following last week's decision by the Competition Commission to block the takeover of Coors equipment services division by a joint venture company owned by Scottish Courage and Carlsberg.

Related articles:​

Committee response to pubco inquiry expected (24 February 2005)

Trade & Industry inquiry responses due (17 February 2005)

Pubcos off the hook on beer tie (21 December 2004)

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)