Business and Innovation Select Committee Follow up Report on Pub Companies 2009-10: Government Response
18 Mar 2010
On 4 March 2010, the Business and Innovation Select Committee (BISC) published its follow up report on pub companies (PDF). BISC has given pub companies a final opportunity to prove that its Framework Code can deliver mutual benefits by June 2011 otherwise it will recommend that Government legislates. It also recommends that action is taken to calibrate the accuracy of data from flow monitoring equipment used by the pub companies.
The Government has published its response today. It endorses the one year deadline for the industry to show it is complying with its own Code, making clear that Government will monitor progress for one year and intervene to regulate the market by putting the Code on a statutory basis backed by an industry enforcer if the industry fails to deliver. The full response can be viewed here:
A package of proposals for practical help for community pubs has also been announced today by Housing and Planning Minister, John Healy MP. The announcement can be view at http://www.communities.gov.uk/news/corporate/1511255
Background
The 2004 the Trade and Industry Committee pubcos report concluded that:
- There was no dominance in the market;
- Small brewers may be disadvantaged by pubcos;
- Cost of 'beer ties' balanced by the benefits;
- Splitting the wholesaling and property functions of the pubcos, by removing the beer tie, could lead to the national brewers having a monopoly.
It recommended that The British Beer and Pub Association (BBPA) Framework Code (external link) should be updated.
On 25 June 2008 the BEC launched a follow up inquiry to see whether the conclusions in its earlier report were still valid and how its recommendations had been applied.
The BEC’s report of 13 May 2009 found that there is no effective dispute resolution system; there are inequalities in bargaining power; a lack of transparency in rent assessment; and the sale of pubs with restrictive covenants should be banned. The BEC wanted BIS refer the issue to the Competition Commission (CC).
On 2 July the BEC asked BIS to delay responding so that progress could be assessed on industry led activity rather than have an incomplete reply.
Also in July, the Campaign for Real Ale (CAMRA) lodged a complaint with the Office of Fair Trading (OFT) over the operation of the beer tie. The OFT did not find evidence of competition problems and concluded that no further action on competition grounds was necessary. CAMRA appealed the decision to the Competition Appeal Tribunal (CAT) in December. However, the OFT announced a consultation on its decision on 5 February 2010.
(Image: Creative Commons)
