Star, the pub arm of Heineken UK, had challenged the imposition and amount of a financial penalty of £2m imposed by the PCA following findings of what was termed ‘seriously and repeatedly’ breaching of the pubs code.
In July 2019, then pubs code adjudicator Paul Newby launched a probe when the office said it had reasonable grounds to suspect the operator of near 3,000 pubs to have used “unreasonable stocking terms” in proposed free-of-tie Market-Rent-Only (MRO) option tenancies, which is against pubs code rules.
On 14 October 2020, the PCA issued an investigation report that found Star had breached the pubs code. Star accepts that it breached the pubs code in the manner set out in the investigation report.
The PCA made eight binding recommendations to Star aimed at improving processes and governance, and overall compliance with the pubs code. An action plan was drawn up in March 2021.
Star has fully co-operated with the PCA and has implemented these recommendations for the benefit of all of its tenants. Star has taken significant steps to reform its processes in order to achieve compliance with the pubs code.
The PCA and Star have now agreed to settle all outstanding litigation connected to the investigation report and financial penalty.
As part of this settlement the financial penalty, set out in the penalty notice, has been reduced from £2m to £1.25m and Star will pay a contribution to the PCA’s legal costs involved in the litigation.
Separately, Star will also pay a contribution to the PCA’s costs of conducting the investigation that resulted in the report and penalty notice.
The PCA and Star consider settlement of this litigation will help to facilitate the positive regulatory relationship between them, building on Star’s constructive work in respect of compliance, to the benefit of the tied pub industry.