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Pub sector given all-clear by OFT | Pub sector given all-clear by OFT |
(about 7 hours later) | |
The Office of Fair Trading (OFT) says it has found no evidence that ties between pub companies and landlords are harming competition in the pub sector. | The Office of Fair Trading (OFT) says it has found no evidence that ties between pub companies and landlords are harming competition in the pub sector. |
Its inquiry followed a super-complaint from the Campaign for Real Ale (Camra) over so-called "beer ties" - landlords having to buy beer from pub owners. | Its inquiry followed a super-complaint from the Campaign for Real Ale (Camra) over so-called "beer ties" - landlords having to buy beer from pub owners. |
The OFT said there was "generally effective" competition between pubs. | The OFT said there was "generally effective" competition between pubs. |
Camra said it would now be urging Business Secretary Lord Mandelson to overturn the OFT's decision. | Camra said it would now be urging Business Secretary Lord Mandelson to overturn the OFT's decision. |
"We do not accept that there is sufficient competition between pubs or adequate consumer benefit from competition and choice within this sector," said Camra chief executive Mike Benner. | "We do not accept that there is sufficient competition between pubs or adequate consumer benefit from competition and choice within this sector," said Camra chief executive Mike Benner. |
"Urgent action is now required by government to stem the flow of pub closures, build a sustainable future and ensure that consumers get a fair share of the benefit from tied agreements as demanded by competition law." | "Urgent action is now required by government to stem the flow of pub closures, build a sustainable future and ensure that consumers get a fair share of the benefit from tied agreements as demanded by competition law." |
'Consumer benefit' | 'Consumer benefit' |
The OFT said it did not consider that supply ties contributed to higher prices. | The OFT said it did not consider that supply ties contributed to higher prices. |
"Any strategy by a pub-owning company which compromises the competitive position of its tied pubs would not be sustainable, as this would result in a loss of sales," said Simon Williams, senior director of the OFT's goods group. | "Any strategy by a pub-owning company which compromises the competitive position of its tied pubs would not be sustainable, as this would result in a loss of sales," said Simon Williams, senior director of the OFT's goods group. |
"Pub-owning companies are not therefore protected from competition by virtue of the supply ties agreed with their lessees. | "Pub-owning companies are not therefore protected from competition by virtue of the supply ties agreed with their lessees. |
"We understand that our response to Camra comes at a difficult time for the industry, but the evidence indicates that consumers benefit from a good deal of competition and choice within this sector." | "We understand that our response to Camra comes at a difficult time for the industry, but the evidence indicates that consumers benefit from a good deal of competition and choice within this sector." |
The OFT added that the issues raised in the super-complaint "do not warrant further assessment", and that it would be taking no further action. | The OFT added that the issues raised in the super-complaint "do not warrant further assessment", and that it would be taking no further action. |
News of the OFT's findings sent shares in pub companies soaring on the London Stock Exchange. Shares in Enterprise Inns jumped 21.8% to 145.1p by mid-afternoon, while Punch Taverns climbed 15.5% to 97.9p. | |
Punch, which with 7,600 pubs is Britain's biggest operator, said it hoped the industry could "move forward constructively". | |
Meanwhile Enterprise, which has about 7,500 pubs, said that the beer tie had, for decades, "provided a low cost of entry to the pub industry for committed, entrepreneurial licensees who are unable to afford to buy a pub of their own". |