OFT will take no further action on pubcos

The Office of Fair Trading (OFT) will take no further action following the Campaign for Real Ale's (Camra) super-complaint over pubcos and the beer tie.

The OFT said it had "not found evidence that supply ties are resulting in competition problems that are having an adverse impact on consumers".

In its eagerly awaited response, the OFT said there was "generally effective competition" between pubs and it did not believe that the beer tie contributed to higher prices or prevented pubs offering wider choice to customers.

In its super-complaint (Camra savages pubcos​), Camra hit out at tied beer prices for tenants and the "flawed" system of setting rents.

It also urged pubcos to offer licensees greater access to local beers and for a law preventing pubs being sold with restrictive covenants. However, Camra urged the beer tie itself to remain.

But the OFT said: "The OFT has received submissions from pub lessees outlining their concerns about the rent assessment process and their negotiations with pub landlords. Although the OFT acknowledges the concerns of these lessees, the objective of the OFT's work is to ensure that effective competition delivers value and choice to consumers.

"The OFT considers that the issues raised in the super-complaint do not warrant further assessment by the OFT, and will be taking no further action."

Simon Williams, OFT Senior Director, said: "'Any strategy by a pub-owning company which compromises the competitive position of its tied pubs would not be sustainable, as this would result in a loss of sales. Pub-owning companies are not therefore protected from competition by virtue of the supply ties agreed with their lessees."

He added: "We understand that our response to Camra comes at a difficult time for the industry, but the evidence indicates that consumers benefit from a good deal of competition and choice within this sector."

Pleased​

Enterprise Inns said it was "delighted" with the news but vowed to avoid complacency and press ahead with addressing some of the "legitimate" issues raised by the BEC.

"The tie has now been reviewed no fewer than 25 times since 1966, 21 in the UK and 4 in the EU. On every occasion it has been concluded that the tie was fit for purpose.

"For many decades the tie has provided a low cost of entry to the pub industry for committed, entrepreneurial licensees who are unable to afford to buy a pub of their own."

The BBPA said it was "very pleased" with the outcome and that it would now be focusing on the roll-out of its new Framework Code of Practice on the Granting of Tenancies and Leases.

"We have always thought that a thorough and dispassionate study of the evidence would deliver this conclusion," said chief executive Brigid Simmonds.

Government action​

Camra chief executive Mike Benner said: "My initial reaction is one of disappointment that the OFT has once again failed to act.

"This will do nothing to overcome the problems that were highlighted by the Business and Enterprise Committee and in our super-complaint.

"We will be calling on the Government to take action now."

Fair Pint founding member Steve Corbett said he was "shocked but not surprised" by the outcome. "The OFT has failed to do the right thing in the past on pubcos and they have failed again here."

Association of Licensed Multiple Retailers chief executive Nick Bish said: "I think it is a real pity. While we were nervous about a competition commission referral, we are astonished that the OFT has not opted to undertake a market study, which would have lasted three or four months.

"You can understand why Peter Luff and his select committee recommended leap-frogging the OFT."

All the reaction​

• Camra: Government must overrule OFT ​

• Luff to re-convene pub inquiry committee​

• Enterprise: we'll avoid complacency despite OFT clearance ​

• Mulholland: OFT does not care about pub tenants ​

• Fair Pint: OFT does not understand pubco model ​

• BBPA to focus on reform roll-out​

• Darby: let's get back to business ​

• OFT: no systematic failure in pubco model ​

• You can download the full OFT report here​.

What do you think of the OFT's decision? Let us know by hitting Post a comment​ below.