Wake-up call for the pubcos

Whatever your view of politicians, they are still the ones who set the rules. So when politicians don't like pubcos, pubcos have a massive problem. And boy, do politicians not like pubcos.

This is crystal clear from the damning indictment of the Business and Enterprise Committee's report. But this view is unfair. Pubcos have many faults, yet there are lots of pub companies that work well with the majority of their licensees.

However, the politicians' view is not surprising. Their postbags brim with letters from individuals unhappy at what's happening to their pubs. Thanks to an incredibly effective campaign by Fair Pint and other tenanted pubco critics, MPs seem to have been persuaded that pubcos are harming a great British institution.

It's not just from within Parliament that pressure on Government to tackle the pubcos will keep on mounting. A couple of major trade unions have emerged to throw their weight behind those who say the large tenanted pubcos have become too powerful.

No Government, particularly one as beleaguered as this, can afford to ignore that kind of sentiment. So, 20 years after the Beer Orders paved the way for the rise of the pubcos, it will prove extremely hard not to refer the tie to the regulation authorities with a view to curbing their power.

Pubcos and regional brewers have a good record when defending the tie in OFT inquiries and the courts of the European Commission. For it to be any different this time round, fresh arguments will have to be found centring not on anti-competitive grounds (no pubco approaches anywhere near the 40% ownership threshold), but on issues such as restraint of trade and "the imbalance of bargaining power between lessees and pubcos" as the Bec report describes it.

Yet an inquiry, and whatever it recommends, will take years to impact on the trade. Tied licensees need more help from their pubcos now. Punch, for one, acknowledges that.

It frankly admits it has got things wrong and must be much more transparent in rent setting and share more profit with its licensees in a declining market. If it had said that to the Bec, and if other pubcos had looked inwardly and realised they must say the same, the report might have had a very different outcome.

Truthfully, pubcos have only themselves to blame for the mess they now find themselves in. To varying degrees of culpability, many in the industry will say, they were arrogant and greedy. They blatantly ignored the 2004 report and felt they were beyond criticism.

Now it's time to listen hard to Bec's promptings and set about recasting the tenant-pubco relationship to create a better more trusting future.