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Beer Tie

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About this deal

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. 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. The new system would let tenants have their ties reviewed and where appropriate, move to a market rent with the freedom to buy their beer from other suppliers. Tenants can adjust their prices to better meet the needs of their customers and compete more effectively.

The vote to end the tie is supported by bodies such as CAMRA and the Federation of Small Businesses. They argue that removing the tie will save many pubs from closure and bring greater competition to the market. Competition Commissioner Joaquin Almunia said: "The rules adopted today will ensure that consumers can buy goods and services at the best available prices wherever they are located in the EU while leaving companies without market power essentially free to organise their sales network as they see best." 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.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.”

T he Competition and Markets Authority exists to promot e competition for the benefit of consumers – therefore it i s disappointing that they are seemingly disinterested in investigating something that will have potentially anti-competitive effects on the UK beer and pub market. Leading c onsumer group CAMRA has called on the Competition and Markets Authority to take the lead and investigate a proposed merger which could reduce the choice of beers available to pubgoers. Independent Family Brewers of Britain chairman Paul Wells said: "It's great news because it does validate the business model that the family brewers have been championing for a long time.The business model of a pub company combines wholesale with estate management. It uses its purchasing power to buy beer at low prices but then sells it at a high mark-up to the publican who also pays it rent. “The whole business model is wrong. A typical wholesaler might make 10-15%, these guys are making double or treble that,” says Marsden. But she will already be in little doubt as to how many publicans view it. Pub tenants and MPs have been “duped and betrayed”, according to the British Pub Confederation, which said the MRO was little more than a myth. While there have been some challenges with parts of the implementation of the code for all involved, the BBPA and the companies covered by the code continue to work closely with the adjudicator and other stakeholders to resolve these,” the chief executive, Brigid Simmonds, said.

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.” 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.

Overview

Challenges arising from supermarket pricing, pub regulation and punitive leases all have a cost. And that cost is a dire selection of the cheapest brands of beer, "ready" meals, poorly trained staff and management, delayed refurbishment, increasingly desperate price promotions and so on. In other words, a disheartening experience for the customer creating a spiral of decline, leading sooner or later to yet another closure statistic. What is it we stand to lose? 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.

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