Beer Tie

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Clarke says he helped draft the pubs code regulations but has still been unable to make them work. He and Law still do not know whether they will get their MRO or end up signing a new tied tenancy with “onerous” conditions. Even if they get their wish, they will have wasted three years of time and money. Mark Robson is founder of Red Mist Leisure, which runs five pubs in the South East of England. He moved into the pub business in 2004 initially operating tied leases via Punch Taverns, but managed to acquire them and now runs them as free houses. He gave the new amendment a cautious welcome. “I am very, very anti-beer tie so if it goes then that’s a good thing. However, usually when the government gets involved in the pub industry they make things worse rather than better. I am little bit sceptical that it will go through as the beer tie has been around for 400 years.”

The tie system also allows people to become pub tenants with smaller personal investments. This helps to make the sector more accessible widening the pool of potential applicants. They say the tied option does not make financial sense for them and the pub would be more profitable – as well as offering cheaper and better beer – if they were free of the tie.According to dozens of pub landlords around the country, already wrestling with the rapid decline in the number of Britain’s pubs, the reality has been very different. The small business minister Kelly Tolhurst recently announced the first statutory review of the pubs code and the way it is arbitrated, via the pubs code adjudicator. According to data from the British Beer and Pub Association, there have been 739 MRO applications since the system began three years ago. Only 57 resulted in MRO tenancies. The BBPA, whose members include the six largest pub companies, believe the pubs code is working well. It accused pub companies of seeking to scupper MRO applications by any means necessary, including spooking them with eviction notices. The group also cast doubt on the independence of assessments used to set rents. Their view is that the tie forces tenants to pay unnecessarily high prices for their beer which according to CAMRA can be 60 – 70% more than non-tied pubs. This impacts on their profitability and ultimately results in too many pub closures.

The BPC chair, Greg Mulholland, who pushed the MRO option through parliament as a Liberal Democrat MP, said that in its current form “tenants do not have the rights they were promised by ministers”. He and Clarke claim that when they applied for the MRO option, Enterprise tried to attach unreasonable conditions to their new lease that made it unworkable. They were left facing the prospect of spending huge sums on legal advice and hours of time on protracted negotiations. They also felt that the supposedly independent assessors who set the market rent were anything but. Fair Pint and the GMB had been lobbying the European Commission not to renew the opt out for the beer tie. Rupert Croft, partner at law firm Maitland Walker, said: "The most notable change is that the definition of market share of 30% will now include buyers as well as suppliers, but this is unlikely to affect pub companies.

The Campaign is now asking the CMA to prove its credentials in standing up for consumers and commit to triggering what is known as the ‘Article 9’ referral procedure – meaning that the UK competition body could lead an investigation instead of the EU Commission, because the joint venture will mainly impact the UK beer and pub market. It is vital that the CMA steps up the plate, thoroughly investigates the proposed joint venture between Marston’s and Carlsberg, and help s to ensure there is fair competition , access to market for brewers, and decent consumer choice when it comes to beer and pubs up and down the country.” He said: “The review into the pubs code must be an honest one, which means accepting the reality, which is that there is no genuine MRO option available to tenants and this must be rectified or it will be clear that the government have and never had any intention to deliver on promises made to parliament.” Fair Pint were encouraged by our meetings with MEPs and Commission officials and there is a real concern about the impact of the pubco model on British consumers and individual tied publicans. The new appeal to Chief Executive, Dr Andrea Coscelli , follows a string of correspondence about the proposed joint venture between Carlsberg and Marston’s that CAMRA believes could have significant anti-competitive effects on the UK beer and pub market.

In 2009, CAMRA submitted a super-complaint to the Office of Fair Trading (‘OFT’) regarding the UK ‘beer ties’ issue. The OFT rejected the complaint, arguing that it had not found evidence of any competition problems having a significant impact on consumers. In contrast, it argued that at a national, regional and local level, there was evidence of a large number of competing pub outlets owned by different operators, who were competitive and offered sufficient choice, arguing that large pub companies source from a number of suppliers. Critics argue that, despite the reduction in the power of large brewers, the competition authorities have failed to recognise the continuing significance of the ‘beer tie’ to pricing, competition and choice. His case was helped by publicity whipped up by the dispute, not to mention romantic regard for the Blue Bell, a 200-year-old pub whose interior has not changed since 1903 and where York City football club was formed. I certainly don’t have any sympathy for them,” says Marsden. “I hope that many publicans are able to buy their premises, I’d certainly like to buy the Prince.” Like most landlords who seek an MRO option, Pybus never got his. Instead, the former British debating championships runner-up thrashed out a deal face to face with his landlord, the pubco Punch Taverns.

Being tied also gives tenants access to wider business support: from maintenance to financial and marketing support. Many pub companies highlight this and argue that this support is vital to many of their tenants especially those who’ve come into the industry from other professions. Community Pubs, aka the traditional boozer, (as distinct from metropolitan or "country" gastropubs) are vital meeting places for the forgotten agricultural villages, market towns and down-at-heel districts of our cities. Yes, they may be entropic hubs of indolence and indulgence. But where's the harm in that? Aren't we hard-pressed enough? What's gone so dreadfully wrong? The decision confirms that under EU law the tie, along with many other similar business agreements, remains a recognised and legitimate business model, which fully complies with EU competition rules. Brigid Simmonds, chief executive of the British Beer and Pub Association, said: "This is a positive decision by the European Commission, which follows an exacting examination by them of all the evidence from a wide range of parties. David Law and Simon Clarke run the Eagle Ale House, near London’s Clapham Common, and rent the premises from Enterprise Inns, the subject of more than three times as many MRO applications as any other chain.