Monday, 1 February 2010

Abolition of Land Agreements Exclusion Order

The Government has made the decision to revoke the Land Agreements Exclusion Order 2004.

CAMRA has been campaigning for its revocation since last summer as part of its campaign to reform the beer tie to address a lack of competition in the pub sector.

This means that the Large pub operating companies PubCo's. Principally those with 500 or more pubs, will now need to work to prove that their beer tie agreements are fully compliant with competition law.

Currently tied landlords are unable to buy beer from independent breweries. This is the reason a lot of Real Ale pubs offer the same beers week in week out each time you visit (It can get boring, even if the beer is good). They are tied by contract to purchase almost all stock from the PubCo if sales figures don't match up with stock orders they face financial penalties. Some PubCo's make their lessees pay over £110 for a 72pint barrel almost twice what they'd pay at an independent brewery. A pub selling a pint of real ale priced at over £3.00 will most likely be owned by a PubCo.

The Government consultation response states that revocation of the Order will promote fairer and more open markets and a better deal for consumers through improved prices, wider choice, greater investment and higher standards of customer service.

Mike Benner, Chief Executive CAMRA, said in the Offical CAMRA press release -

‘This is very positive news for pub-goers, small brewers and struggling lessees. The Order is an anomaly which has for too long given legal cover to companies which are party to potentially anti-competitive agreements. The large pub owning companies will now have to review their existing beer tie arrangements in the full knowledge that they will be liable to severe penalties if it is subsequently proven that they have breached Competition Law.

‘CAMRA remains supportive of the beer tie model provided that it offers a fair share of benefits to consumers through greater choice, price competition and quality. We now urge the large pub owning companies to publicly commit to delivering on the basic principle that a tied tenant should be no worse off than they would be if free of tie.’

So are the PubCo's going to struggle to prove that they are being competitive or not?

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