Published: 14 Oct 2010
Last Updated: 19 Aug 2013
Is it unfair that many pub landlords are forced to buy their beer from the company that owns their pub, even if that means paying well over the standard market price? The Office for Fair Trading says not; in response to a ‘super-complaint’ from CAMRA (aka the Campaign for Real Ale), the regulator said today that the level of competition in the sector meant the beer tie couldn't inflate prices to artificial levels. Which is fine for us, but it won't come as much consolation to struggling landlords. Though the good news is that the row may at least force the industry to raise its game...
Pub landlords have had a hard time lately, with sales flagging across the board (with the notable exception of Wetherspoons, whose landlords don't have a beer tie). So it's no wonder landlords aren't happy about having to pay over the odds for their beer – more than 50p over, according to CAMRA, which claims that many struggling pubs are being pushed over the edge as a result. It argues that the arrangement is both unfair and uncompetitive, because it distorts the operation of a free market in beer prices.
However, the OFT canned their objection again today (having done so once before last year). In what might be one of its last acts, the regulator has decided that the pub sector is perfectly competitive overall, thanks very much - consumers have plenty of options if they fancy a pint, both in terms of which pubs they go to and which beers they buy (since the big pub companies buy their beer from a wide range of suppliers). So the current set-up doesn't seem to be restricting choice or competition.
And therein lies the problem, at least as far as the landlords are concerned. As the OFT admitted, their focus was almost entirely on the consumer implications. But the landlords argue that if the beer tie keeps pushing pubs out of business, that's going to have a huge impact on consumer choice. 'Blinkered', 'selective' and 'extraordinary' were some of the choice words a disgusted CAMRA used to describe today's judgement; it argues that higher costs imposed on landlords 'will inevitably be passed onto consumers through higher prices, under investment and pub closures'.
Still, the upside is that CAMRA has at least succeeded in putting this issue in the spotlight. Business Secretary Vince Cable has already accepted that landlords have legitimate complaints about their treatment, and warned that the big pub companies face legislative action if they don't raise their game before next June. Admittedly the Government's form in this area isn't great, but it has encouraged the British Beer and Pub Association to bring in a new code of practice about how the latter should treat their landlords. So although they've lost this battle, for the landlords, the war isn't over yet.
Pub landlords have had a hard time lately, with sales flagging across the board (with the notable exception of Wetherspoons, whose landlords don't have a beer tie). So it's no wonder landlords aren't happy about having to pay over the odds for their beer – more than 50p over, according to CAMRA, which claims that many struggling pubs are being pushed over the edge as a result. It argues that the arrangement is both unfair and uncompetitive, because it distorts the operation of a free market in beer prices.
However, the OFT canned their objection again today (having done so once before last year). In what might be one of its last acts, the regulator has decided that the pub sector is perfectly competitive overall, thanks very much - consumers have plenty of options if they fancy a pint, both in terms of which pubs they go to and which beers they buy (since the big pub companies buy their beer from a wide range of suppliers). So the current set-up doesn't seem to be restricting choice or competition.
And therein lies the problem, at least as far as the landlords are concerned. As the OFT admitted, their focus was almost entirely on the consumer implications. But the landlords argue that if the beer tie keeps pushing pubs out of business, that's going to have a huge impact on consumer choice. 'Blinkered', 'selective' and 'extraordinary' were some of the choice words a disgusted CAMRA used to describe today's judgement; it argues that higher costs imposed on landlords 'will inevitably be passed onto consumers through higher prices, under investment and pub closures'.
Still, the upside is that CAMRA has at least succeeded in putting this issue in the spotlight. Business Secretary Vince Cable has already accepted that landlords have legitimate complaints about their treatment, and warned that the big pub companies face legislative action if they don't raise their game before next June. Admittedly the Government's form in this area isn't great, but it has encouraged the British Beer and Pub Association to bring in a new code of practice about how the latter should treat their landlords. So although they've lost this battle, for the landlords, the war isn't over yet.
