Background to our campaign
In July this year CAMRA submitted a complaint to the Office of Fair Trading (OFT) stating our concern that the unfair operation of the "beer tie" by large pub companies is artificially inflating the consumer price of beer, reducing consumer amenity in pubs and increasing the rate of pub business failures.
On 22nd October 2009, the OFT rejected our super-complaint. In our view the OFT's response was partial, misleading, and heavily predicated on industry assertions. Their failure to conduct a more thorough analysis seriously undermines the validity of their conclusions
Among the serious failures in their reasoning and analysis are:
The OFT relied on data provided to them by the large pubcos while disregarding the evidence of individual licensees.
The OFT claimed that the interests of pub companies are aligned with the interests of their tenants, despite evidence to the contrary including that 67% of tenants earn less than £15,000 per year while pub companies earn around £60,000 per year from each pub.
The OFT found that tied publicans would be around £20,000 a year better off if they were free to buy beer on the open market, but discounted this based on the supposed business support provided
Click here for more on the failings in the OFT response.
What is the cost of the unfair tie arrangements operated by large pubcos?
CAMRA believes that the costs to ordinary drinkers of the unfair operation of tie agreements could be around £2.5 billion each year.
Communities are losing their pubs and potentially great licensees at an astonishing rate of 7 per day - this is partly due to the recession, smoking ban and other factors but the inflexible nature of the beer tie is a big part of why tied pubs operated by the large pub companies cannot weather the storm.
Between 10,000 - 15,000 pubs are currently unviable because of a lack of competition allowing companies to overcharge tied publicans. Unless the OFT acts to ensure proper competition as many as 1 in 4 pubs currently open will be forced to close.
