GK case will not affect property market, predicts agent

The case between Greene King and 100 of its tenants over the beer-tie is unlikely to have any effect on the sector, says a leading property agent.

Tenants in the Oxford area claim they cannot compete with Greene King managed houses which are able to purchase beer from the brewer at cheaper rates.

They have hired competition lawyers Maitland Walker to prove that Greene King is acting anti-competitively.

The group is taking the case to the Office of Fair Trading (OFT), arguing that the brewer has more than a 40 per cent share of pubs in the area - the limit where the OFT will intervene.

However, Colin Wellstead, head of pubs and restaurants at Christie & Co, believes that the case will have little effect on the property market.

He said: "Most regional and family brewers have a monopoly where they brew. I think a lot of these monopolies already exist. I don't think this case will change the market.

"These sort of issues are not new. Every town has a brewer that dominates.

"The argument is that most of these people are getting their tenancy at a rent that reflects the fact they are tied."

A tenancy and lease is well recognised as an easy entry into the pub trade. Licensees pay for the terms of a lease, pay a rental cost generally on a monthly basis and then are tied to their pubco to purchase its beer.

The aim of such an agreement is that lessees get a level of support from their pubco in return for discounted rent and higher beer prices.

Last year neither the Depart-ment of Trade & Industry (DTI) nor the OFT recommended any firm action against pubcos following the Trade and Industry Select Committee investigation, which was completed on December 21, 2004. And the OFT reiterated that there was no evidence of anti-competitive behaviour in the beer market.