OFT announces outcome of CAMRA super-complaint consultation
104/10 14 October 2010
The OFT has today issued its final decision in response to a super-complaint by the Campaign for Real Ale (CAMRA).
A key issue in CAMRA's complaint was the impact of the 'beer tie', which requires pub lessees to purchase beer solely through their pub-owning company landlord.
The OFT has concluded that the pub sector in the UK is competitive overall and it has not found evidence of competition problems that are having a significant adverse impact on consumers. It has therefore concluded that there are insufficient grounds to justify further OFT action.
The OFT first responded to the super-complaint in October 2009 but decided to consult on the findings contained in that response following an appeal by CAMRA to the Competition Appeal Tribunal, which is ongoing. A number of consultation responses were received and the OFT has since undertaken additional information gathering and analysis in response.
Following this work, the OFT has concluded that consumers benefit from considerable competition and choice between pubs and that this competition prevents the beer tie from being used to inflate pub beer prices beyond competitive levels. The OFT also concluded that the beer tie has not prevented tied pubs from offering a wide choice of beers to consumers, having found that pub-owning companies generally source beer from a considerable range of suppliers, including smaller brewers.
Ann Pope, OFT Senior Director of Goods, said:
'The OFT appreciates how important local pubs are to many consumers and local communities. CAMRA's super-complaint has provided a timely opportunity to examine the pub sector, as the beer tie model has attracted considerable attention recently. After carrying out detailed analysis, we have found that the sector is competitive overall and that there is no need for the OFT to take further action at the moment.
'The OFT recognises that many pub lessees are concerned about issues regarding the contractual relationship with their pub-company and we note that the pub industry is taking steps to address some of these concerns. Our focus, however, has been to assess whether the market is working well for consumers.'
Download the OFT's final decision regarding CAMRA's super-complaint (pdf 1.2Kb).
- CAMRA submitted a super-complaint to the OFT in July 2009. CAMRA's allegations included that:
- supply ties were protecting pub-owning companies from competition, so that they are able to inflate the prices and rents to tied pubs, leading to higher prices for consumers
- the existence of supply ties was leading to the foreclosure of suppliers who are unable to access tied pubs directly.
- In its super-complaint, CAMRA stated that the OFT should carry out a market study into the pub sector and following this, that the OFT should consider accepting legally binding undertakings from the industry in lieu of making a market investigation reference to the Competition Commission.
- 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.
- The OFT responded to CAMRA's super-complaint on 22 October 2009. The OFT's response stated that it had found no evidence that beer supply ties were resulting in competition problems that were having an adverse impact on consumers, and that it would therefore be taking no further action. The OFT's October 2009 response to CAMRA's super-complaint can be found at www.oft.gov.uk/shared_oft/super-complaints/oft1137.pdf (pdf 644kb). See press release 127-09.
- The OFT opened a consultation on the findings set out in its response to CAMRA's super-complaint on 5 February 2010. This followed an appeal by CAMRA to the Competition Appeal Tribunal. In announcing its consultation, the OFT noted that while it considered that it had a firm basis to defend CAMRA's appeal, it was mindful of the substantial resource that both it and CAMRA would need to invest in the litigation. The OFT therefore decided that it would be a more constructive use of resources to allow CAMRA and any other interested persons or groups the opportunity to make representations about the findings that it reached in its response to the super-complaint, before reaching its final views.
See press release 14-10.
- As a consequence of the OFT's decision to open the consultation, the OFT and CAMRA asked the Competition Appeal Tribunal to stay the proceedings. These proceedings remain to be determined.
- The OFT asked for representations from parties by 24 March 2010. The OFT received submissions from over 40 parties, including industry organisations and trade associations, pub companies, brewers and pub lessees.
- In a report on 'Pub Companies' in 2009, the House of Commons Business, Innovation and Skills Committee made a number of recommendations to industry regarding the contractual relationship between pub companies and their lessees. This has lead to the British Beer & Pub Association publishing a revised industry Framework Code of Practice on the Granting of Tenancies and Leases and to individual pub companies implementing revised codes of practice.
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