Landlords should have beer-tie opt-out, says Commons report

Pub management companies should allow landlords to opt-out of beer-ties, a parliamentary review has said.

Research by the House of Commons' Business and Enterprise Committee (BEC) found that 78% of the 1,000 licensees surveyed were not happy with the beer purchasing arrangements between pub management companies (pubcos) and landlords, with 73% saying that they were struggling financially.

It also showed that 67% of licensees said that they earned less than £15,000 a year. Even among those turning over in excess of £50,000 per annum, the majority made less than £15,000 in profit.

The report called for an urgent onclick="javascript:pageTracker._trackPageview('/outgoing/competition-commission.org.uk/')"Competition Commission investigation into the beer tie, saying that the Office of Fair Trading had "failed to examine this market properly".

It recommended that every landlord now be offered the choice of being free-of-tie, with an opt-out clause written into their contract.

Peter Luff MP, chairman of the committee, said: "Our report challenges pubcos to demonstrate the benefits of the tie, by offering their lessees the opportunity to run their pubs on a free-of-tie basis. This can only work if there is a transparent system for negotiating rents."

In a statement, reported by The Publican, pub company Punch Taverns said: "We call on the government to reject the committee's recommendation for a market investigation by the Competition Commission. The competition authorities have looked at this market a number of times.

"We strongly believe that the tied pub model provides a fair and equitable approach to sharing risk between ourselves and our licensees, represents a low cost opportunity for entrepreneurs, and has a rightful place in the market."