Legal challenge against MRO in pubs code 'would fail'

By Ellie Bothwell contact

- Last updated on GMT

Related tags: Beer tie, Landlord, Renting, Leasehold estate

'New Clause 2 is much less intrusive than the 1989 Beer Orders,' says Julian Maitland-Walker
'New Clause 2 is much less intrusive than the 1989 Beer Orders,' says Julian Maitland-Walker
There is no scope for a legal challenge against the market rent only clause in the pubs code, a leading competition lawyer has claimed.

In an exclusive interview with the Publican’s Morning Advertiser​, Julian Maitland-Walker, senior partner at Maitland-Walker, said anything that frees up the beer tie “must be pro-competition”.

He referred to the 1989 Beer Orders which introduced “all sorts of restrictions” and outlined that any brewery with more than 2,000 pubs had to sell off some sites or make them free-of-tie.

Maitland-Walker has been in practice as a corporate and commercial lawyer since 1974, specialising in the field of European and Competition law where he is recognised as “undoubtedly the best competition lawyer in the region” by the Legal 500 Directory.

Increases competition

“New Clause 2 is much less intrusive than those beer orders.” he said. “The whole point of the clause is to increase competition, meaning tied tenants can buy beer at lower prices and pass on a benefit to customers, not restrict it.

“The Government has legislated many times in many industries where there are impacts on existing contracts and no one has suggested they do not have the right to do so.

“Sometimes where the impact is retrospective in effect it can be subject to challenge. I don’t think that is the case here.”

Threshold

Regarding the fact the clause only applies to companies with more than 500 pubs, he said: “I refer back to the Beer orders. If you had 1,999 pubs you were not subject to selling off and other restrictions. Setting a threshold is fine if it is reasonable. 

“The beer tie did serve Britain well in the old days but the current beer tie doesn’t bear relation to how it was in the past. Tied tenants have high rent and much higher prices for beer meaning they are not able to compete with free-of-tie pubs and supermarkets.”

Rent

Regarding the scenario that a pub landlord cannot set its own rent, he added: “All landlords of commercial premises are subject to tenure provision in the Landlord & Tenant Act 1954 meaning on renewal of tenancy the landlord and tenant negotiate, but in the end it has to be deemed reasonable by a County Court judge.

“All this [clause] does is ensure this is carried out on an industry basis by someone who is not acting for either party. The property rights have not changed. 

“So I don’t think the objections raised by pub companies and landlord representatives are really valid. It sounds very fair and sensible.”

Last week, leading analyst Geof Collyer, of Deutsche Bank, said the amendment is “directly contrary to Government policy as well as being against UK & EU competition law”.

Related topics: Legislation

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