Pubcos cheer OFT decision
Beer campaigners have failed in a bid to force leased pub operators to allow their landlords to buy beer supplies from rivals, boosting shares in the sector.
The Office of Fair Trading (OFT) has rejected a complaint from the Campaign for Real Ale (Camra), which claimed that tied arrangements forcing pub tenants to buy solely from the owners of their pubs were causing competition problems.
Camra said the rules were forcing up prices, reducing choice and causing pub closures.
But the OFT said it had failed to find evidence that supply ties were hitting drinkers.
Simon Williams, senior director of the OFT’s Goods group, said: “Consumers benefit from a good deal of competition and choice.”
The news relieved investors in Punch Taverns and Enterprise Inns, Britain’s biggest pub operators, which were already facing huge debts, the impact of the recession and supermarket competition. Shares in Punch, which have fallen 85 per cent in the past 18 months, rose 12.5p to 97.25p, with Enterprise up 27.9p to 147p.
Enterprise, which with 7,500 pubs in Britain’s second biggest operator, defended the beer tie.
“For 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,” it said.
Astaire Securities analyst Mark Brumby said some 15 to 50 per cent of the companies’ income could have been threatened had the tie been abolished. “All things considered, this announcement is a good result,” he said.
More than 50 pubs are closing every week, according to the British Beer and Pubs Association (BBPA).
Camra urged ministers to overrule the OFT and refer the matter to the Competition Commission for an in-depth investigation.
“Urgent action is now required by government to stem the flow of pub closures,” Mike Benner of Camra said.