13/05/2009 - Call for probe into 'beer ties'
Ties between pub firms and licensees should be investigated by the competition watchdog over fears the current practice is forcing up drink prices, according to MPs.
The system by which pub companies compel their tenants to buy drinks from them - known as the 'beer tie' - should be severely limited, the Business and Enterprise Select Committee said.
MPs warned: "There... are strong indications that the existence of the tie pushes up prices for consumers."
The committee called on the Government to order a Competition Commission probe, saying it was 'disappointed' at the Office of Fair Trading's reluctance to re-examine the beer tie's impact since a study in 2004.
'Pubcos' such as Enterprise Inns and Punch Taverns are concentrated on by the committee's report, after claims that firms use their strong position to impose heavy rental burdens.
The report said: "The failure of the pubcos to pass on the benefit of their discounts to the lessees prevents the lessees from passing on the benefit to the consumer in terms of reduced prices."
It concluded that this had led to an 'ever increasing disparity' between the price of beer in pubs and off-licences, adding that this would only undermine the viability of many pubs and encourage people to drink at home.
Punch Taverns said it was disappointed by the report's findings and said there were good grounds for the Government to reject the committee's recommendation for a market investigation by the Competition Commission
Copyright © Press Association 2009
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