Legal advice: Beer-ties - the future...

Beer-ties are one of the most debated issues in recent pub law history. Are they a good thing, are they a bad thing, should they be banned, should they be more strictly regulated, should the regime be more relaxed? One thing is safe to say, though: everybody has a different opinion.

It had been assumed by many in the industry that the questions surrounding beer-ties and the potential for unfair competition in the marketplace would be brought to a head by the case of Inntrepreneur Pub Company and others v Crehan (the Crehan case). This proved not to be so. The case concerned complex competition issues and ended up in the House of Lords via Europe.

In 1991 the claimant, Bernie Crehan, entered into agreements to take the leases of two pubs in Staines in Middlesex from the defendant, Inntrepreneur Pub Company. These were standard form leases containing ties which obliged Mr Crehan to buy his beer from Courage at its list price.

Both businesses failed because Mr Crehan could not compete with other pubs nearby which were able to buy their beer at lower prices. He surrendered his two leases in 1993, having lost a substantial sum of money.

In 1993, Courage sued Mr Crehan for £15,226 outstanding on the beer account and he counter-claimed against Courage and Inntrepreneur for damages, alleging that his losses had been caused by a tie agreement which was unlawful under competition law.

It should be noted that the form of beer-tie in question here was that used in the 1990s, which has long been superseded. Therefore the facts upon which the courts were being asked to reach a decision were historic and similar facts are extremely unlikely to be litigated again.

What then followed were various applications to the European Commission in relation to infringement of competition law and lengthy negotiations between Inntrepreneur and the commission. As is normal, the domestic case was stayed, or put on hold, until a conclusion was reached at European level.

The Crehan case eventually made its way back to the UK before Mr Justice Carnwath. The crucial issue was whether or not the court was obliged to follow the reasoning and decisions made by the commission in previous cases, such as those involving Bass and Whitbread.

The judge stated that there were "obvious attractions" in simply following those past decisions but declined to do so. He concluded that the beer-ties in question did to some extent seal off part of the market, but that such sealing off was not comprehensive. Therefore he found the beer-ties to be lawful and ruled in favour of Inntrepreneur.

The case then proceeded to the Court of Appeal, which reversed the decision, taking the approach that the commission's view in previous decisions should have been followed by the High Court. Accordingly the court found in favour of Mr Crehan.

The House of Lords in turn reversed this ruling by coming down on the side of Inntrepreneur. It held that, while the High Court was entitled to take into account the views expressed by the commission in previous decisions, and that courts should respect the commission's expert analysis, commission decisions are ultimately only part of the admissible evidence which a court should take into account. Their Lordships found that the High Court was correct in not simply following the commission's findings in past cases, instead also addressing the facts of the case in hand.

So what does this actually mean as far as the legality of beer-ties is concerned? Put simply, it leaves things up in the air. Each case will be decided on its own facts and merits.

On the one hand this seems to be the best way of achieving fairness and justice, but on the other, it might have been useful to have been given some general guiding principles as to when a beer-tie is and is not lawful.