Following yesterday’s (10 July) announcement that Star would be the centre of a PCA investigation, a spokesperson for the operator has told The Morning Advertiser (MA) it will comply with the process.
“We await further details from the PCA and when we receive them, we will cooperate fully,” said the spokesperson when asked how Star was preparing for the investigation.
The brewer and operator had been given 24 hours’ notice prior to the PCA’s announcement yesterday that Star, which owns near 3,000 pubs, was believed to have used “unreasonable stocking terms”.
If found to be in breach of the pubs code, Heineken could be liable to pay a seven-figure penalty, which is the equivalent of up to 1% of Heineken’s annual UK turnover, deputy PCA Fiona Dickie said yesterday.
‘Unreasonable stocking terms’
“We suspect that [Star Pubs & Bars] has breached the pubs code by offering unreasonable stocking terms to tenants seeking to go free-of-tie,” she told The MA.
“A stocking requirement is not a tie, it’s a new concept that was created by the pubs code and it does permit a brewing pub owning business to require a tenant going free of tie under MRO (the Market-Rent-Only option) to continue to stock products,” Dickie continued.
“But there are limits and the requirements must be reasonable. The tenant must be able to buy products on the open market, to secure the best price and they cannot be prohibited from stocking competitor brands.”
However, Star said the PCA’s investigation involves less than 5% of its estate, which reflects the number of licensees who had requested the market rent only option.
Dickie said Star had issued 111 proposed tenancies to operators wishing to go free-of-tie, 39 of which had been referred for arbitration because of stocking issues.
If found to be in breach of the code
Star would not comment on the action it would take if the PCA found the pubco to be in breach of the code.
“It would be premature to speculate on the outcome of the investigation but of course we will cooperate fully with the PCA whilst robustly defending our position,” the spokesperson said.
“This investigation applies to a very small proportion of our total pub estate,” Star added.
“Meanwhile, we continue with our record £50m investment into our pubs estate this year.
“Our focus continues to be on on building successful businesses in partnership with licensees and on creating great pubs for customers.”