Two pubcos face criticism over confidentiality waiver at BEIS committee hearing

The committee had called both pubs code adjudicator (PCA) Paul Newby and deputy pubs code adjudicator (DPCA) Fiona Dickie to answer questions on the progress of the organisation.

Dickie was outspoken over the approach of certain pubcos and their refusal to agree to waiver confidentiality in arbitration rulings.

She said that while Admiral and Star Pubs & Bars had shown the “most willingness”, Ei Group and Greene King had been “intransigent”.

“It is our number one issue for furtherance of the objectives of the code,” she told MPs.

“Confidentiality in statutory arbitrations under the pubs code is wrong on every level.”

Newby said that he was working to persuade all the companies involved to agree because keeping the awards confidential was “plainly not right”.

“We are pleased to say that we have persuaded a majority of pub-owning businesses (POBs) to go down this route of waiver to a degree at least,” Newby said.

It was revealed that there would have to be agreement from all the pubcos to waiver confidentiality for all arbitrations.

“If we are not successful in persuading and using our regulatory powers then this should be another issue that is considered as part of the statutory review process,” Newby added.

MRO​

Dickie also told MPs said there were “significant levels” of contention and disagreement within the industry and a “deadlock” over market-rent-only (MRO) option issues.

The PCA revealed that 37 MROs had been granted but it also revealed that it did not know the full extent of agreements due to the confidentiality of the pubcos.

“It feels to us that there is resistance from certain POBs at every step in relation to the MRO provisions,” Dickie said.

“This represents a fundamental threat to their business model and they are fully prepared to test it and commit significant resources to testing it.”

Dickie also revealed that Star Pubs & Bars had the highest conversion rate granting 10 MROs after 43 full responses.

The lowest conversion rate was Ei Group, which had 349 responses issued and 15 MRO agreements agreed to date.

Dickie said: “On one side, you have evidence from some of the POBs that claim this is an indication that tenants do not really want to go free-of-tie and are happy to negotiate their tied deal. On the other hand, you have voices on the tenants' side who are saying this is the outcome of unfair behaviour from the POBs.”

The organisation said it was looking for more information gathering powers to decide what the real issues were.

The MPs questioned the role of the PCA in being both regulator and arbitrator. Newby said he believed the roles could be managed together and said that the organisation had used the activity of arbitration to inform how it moved forward as regulators.

However, he admitted this should be considered at the statutory review by the Government. He pointed to the judicial review over the advice note on MRO.

“We are at a point where the law is far from settled and we are still being challenged. We have issued our advice note and that is not accepted and the advice note itself is the subject of a legal challenge,” he said.  

“A key part of our role is to get to a point where there is clarity about what this code actually means in legal terms.”

Long time-frames​

The MPs questioned the long time-frames faced by tenants wanting to resolve disputes through the PCA process.

Newby said: “It has been a very challenging task, which I don’t think was forecast in the way that it has happened.”

He said he regretted not asking for more resources earlier.

Dickie added: “There is a significant caseload and neither of us have a magic wand. The number of cases that have been outstanding for more than six months is coming down and it is not going to go up. We are only going to make more progress not less.”

On the issue of deed of variation on new leases, which is the subject of the judicial review, Dickie said: “Within the MRO, parliament could have expressed the vehicle that it required. Our view is that parliament didn’t do that because it didn’t want to prescribe on the matter. We consider that all the signs of parliament's intent are there but other people take a different view on what that intention is.”

Newby added that the legislation had left it to the parties to agree but said POBs had used that “frankly to their advantage”.

He also raised the issue of tenant representation and the fact that they did not have a body to lobby on their behalf.

“We would like there to be much better representation for tenants and we are taking to the industry on this,” he added.  

Newby also added that for issues such as behaviour there could be another form of dispute resolution used and not arbitration.