Office of Fair Trading gives beer ties the all-clear

22nd October 2009, 9:35am

The Office of Fair Trading (OFT) has today issued its response to the Campaign for Real Ale (CAMRA) super-complaint, saying it has found no evidence that beer ties are resulting in unfair competition practices.

In its complaint, CAMRA raised concerns about the operation of exclusive purchasing obligations by pub-owning companies, which require lessees to purchase beer solely through their pub-owning company landlord.

CAMRA stated that these so-called 'supply ties' protect pub-owning companies from competition, and lead to higher beer prices and less choice for consumers. CAMRA also raised other issues including the methods used by pub-owning companies for calculating rents.

The OFT said there is generally effective competition between pubs and does not consider that supply ties contribute to higher prices or prevent pubs offering a wide choice to consumers.

Simon Williams, OFT Senior Director, said: "Any strategy by a pub-owning company which compromises the competitive position of its tied pubs would not be sustainable, as this would result in a loss of sales. Pub-owning companies are not therefore protected from competition by virtue of the supply ties agreed with their lessees.

"We understand that our response to CAMRA comes at a difficult time for the industry, but the evidence indicates that consumers benefit from a good deal of competition and choice within this sector."

CAMRA has this morning criticised the OFT for "failing to protect consumers by taking no action" following the consumer group's super-complaint submitted in July. 

The group is calling on the government to overturn the decision suggesting the Competition Commission should now get involved. 

Mike Benner, CAMRA's chief executive said: "It is difficult to see how the OFT can argue that competition is working well in the pubs sector when demand is falling, yet prices are rising. Urgent action is now required by Government to stem the flow of pub closures, build a sustainable future and ensure that consumers get a fair share of the benefit from tied agreements as demanded by competition law.

"There simply cannot be effective competition between all pubs when many pub landlords are placed at a huge disadvantage, by paying wholesale beer prices that can be around 50p a pint greater than their free of tie competitors."

Brigid Simmonds, chief executive of the British Beer & Pub Association welcomed the decision saying it shows the pub sector is operating in a transparent manner.

Simmonds said: "The BBPA is very pleased that the OFT has announced a clean bill of health for the pub sector. We have always thought that a thorough and dispassionate study of the evidence would deliver this conclusion.

"Our objective is to build a policy environment that recognises and supports the considerable contribution of the great British beer and pub sector to the nation's economic and social life. It is time for all of us focus on that task and work together in achieving that."

Related Articles:

• 14 Oct 2010 - CAMRA calls the OFT 'blinkered' as beer tie problems are dismissed
• 08 Feb 2010 - OFT opens consultation on CAMRA'S beer tie
• 04 Feb 2010 - Pubs are still closing but at a slower rate, says BBPA
• 06 Jan 2010 - CAMRA urges pub goers to donate to its 'Consumers v. OFT' campaign fund
• 04 Jan 2010 - Pubco tied tenants will ballot for strike action in 2010
• 24 Jul 2009 - Beer ties and the Office of Fair Trading
• 24 Jul 2009 - 'Super-Complaint' prompts OFT probe into pub market
• 13 May 2009 - MPs call for inquiry into 'beer tie' activity
• 26 Sep 2008 - FSB calls for beer ties to be scrapped

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