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127/09 22 October 2009
The OFT has today published its response to the Campaign for Real Ale (CAMRA) super-complaint relating to the supply of beer in pubs.
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.
Having examined the issues raised in the super-complaint, the OFT has not found evidence that supply ties are resulting in competition problems that are having an adverse impact on consumers.
Download the OFT response (pdf 647kb).
The OFT has found that 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.
The OFT has received submissions from pub lessees outlining their concerns about the rent assessment process and their negotiations with pub landlords. Although the OFT acknowledges the concerns of these lessees, the objective of the OFT's work is to ensure that effective competition delivers value and choice to consumers. The OFT considers that the issues raised in the super-complaint do not warrant further assessment by the OFT, and will be taking no further action.
Simon Williams, Senior Director of the OFT’s Goods group, 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.'
1. Download the OFT response to the CAMRA super-complaint (pdf 647kb).
2. The Enterprise Act 2002 (the Act) makes provision for designated consumer bodies to make super-complaints. A super-complaint, as defined by section 11(1) of the Act, is a complaint submitted by a designated consumer body that 'any feature, or combination of features, of a market in the United Kingdom for goods or services is or appears to be significantly harming the interests of consumers'. CAMRA is a designated consumer body. Within 90 days after the day on which a super-complaint is received, the OFT must say publicly how it proposes to deal with it.
3. For more information regarding the super-complaint process, see the super-complaints page.
4. Since the CAMRA super-complaint was made to the OFT, the British Beer & Pub Association has announced proposals for a revised Framework Code of Practice on the Granting of Tenancies and Leases. Further, the Royal Institution of Chartered Surveyors has published a report entitled: 'Pub Industry Forum Report and Recommendations' which sets out proposals for greater transparency regarding rent assessment methods used in the pub industry.
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