Minister "pleased" OFT has re-opened beer tie inquiry
25 February, 2010
In an exclusive interview with The Publican, Licensing Minister Gerry Sutcliffe claims there is lack of consistency over pubcos' approach to the tie - and defends Labour's record on pubs
A government minister has admitted he is “pleased” the Office of Fair Trading (OFT) is re-examining the beer tie, arguing there is a lack of a “consistent” approach by pubcos.
In an exclusive face-to-face interview with The Publican, Licensing Minister Gerry Sutcliffe said he knew of licensees in his constituency that had been “put in a difficult position” by pubcos.
"The OFT have re-opened the CAMRA appeal and I'm pleased about that... but obviously it's a matter for the competition auhtorities," he said.
Sutcliffe revealed that in a meeting with the British Beer & Pub Association (BBPA), he rejected the group’s argument the tie was not an issue.
“I spoke to Brigid Simmonds (chief executive of the BBPA) who was trying to argue that the tie wasn’t a problem,” he said.
“But I said to her Brigid, it is, because different companies are operating in different ways… what the solutions are a competition issue and that’s why it’s right the OFT are going to take a look at it.”
The minister refused to speculate on whether the tie would end up at the Competition Commission, but added: “The fact that CAMRA feel as strongly as they do shows it is a big issue in the sector”.
It comes at a time when the tie is moving up the political agenda again with MPs on the Business, Innovation and Skills expected to report back next week on their follow-up inquiry into pubcos. The tie was also a hot topic at a debate in Parliament yesterday on the pub trade.
The BBPA is hoping a new framework code of practice for its members will show to MPs it is addressing concerns about the tie.
During his interview with The Publican, Sutcliffe rejected the idea the current Labour government has been bad for pubs – and argued the Tory party would be “completely wrong” to “tear up” the Licensing Act, as it has threatened.
He said it would be wrong to “go back and lose the flexibility” that the licensing regime offers.
And in a warning to the trade over the possibility of a Conservative government, he said: “It would be better to work with the government that you know, than someone who comes in and threatens all sorts.”
He also pointed the finger at theTories for the “break up of the industry” in the form of the Beer Orders.
Sutcliffe denied the government was being led by headlines in the Daily Mail in its policy towards pubs.
“What we’ve tried to do is be supportive in the diversification of pubs into food and live music and looking at ways we can support pubs,” he said.
“Obviously to see the sector reduce at the rate it does, we will be concerned about that. It’s easy to blame government. But I don’t think it’s government alone that’s caused the problem.”
Sutcliffe said he believed the “change in people’s drinking habits” was the main reason for the record number of pub closures, which has slowed to 39 a week after reaching a high of 52 a week last year.
“People’s attitudes are not the same as they were in the past,” he said.
On the issue of irresponsible supermarket deals and talk of minimum pricing, he denied there was a “reluctance” among government to act.
He added it was a case of “getting the evidence”, but the Department of Health was “looking at the issue”.
And hopes of an exemption for pub gigs attracting 100 people or fewer, as proposed by the government, looks unlikely to become law before the general election.
“I don’t think it will necessarily come in before the election,” he said. “If we have got the timescale right then it could do.” But he said the parliamentary reform order would “not be lost” even after the election.
Sutcliffe welcomed John Healey's appointement as pubs minister, saying: "I think it's a step in the right direction and should reinforce that wider view that the government is taking this seriously."
Licensing Minister Gerry Sutcliffe talks to The Publican's James Wilmore
Readers' comments
Colin, I have attended several of the GMB meetings and there appears to be growing support for the inevitable strikes, why do you consider it your duty to advise others of not supporting this action ? particularly as you have never had a pub, I joined the GMB and am more than happy for them to have my 11 quid per month, it's money well spent, compared to spending it on tied beer, which is a con.
Superb musicians Colin, nice guys, great to have a beer with, and like most musicians very supportive of PRM. They see good music pubs closing and dont see the need for it.
Colin, you are merely a "PUBCON HUGGER"
Smithers, thankfully there will be no strike, common sense and good strategy will prevail. Best get your sackcloth and ashes out old chap, you're cooked.
The strikes will finish these awful pubcons overnight paul, bring it on!
Well Paul, it looks like we share a similar taste in music. I still have the original album with all that strategically placed fruit on the cover. :)
Paul, as posted elsewhere any kind of rent strike is too dangerous to contemplate. However, good to see that litigation is now an option and I hope that PubRev succeed where others have failed so miserably. From you own post you recognise that in effect two thirds of the tied estate is solvent that would certainly give PR a problem is achieving a majority consensus for anything other than a class action
Colin I disagree the Competition Commission is the route to go down in my opinion. You are right in saying that the courts can act when the right case wins out however courts are not best pleased to have to regulate industries as this responsibility lies with government and regulatory bodies. There is however no reason why both courses of action cannot be taken.
Steve, it would appear form your answer that hot a lot of thought has actually gone into the aftermath of CC failure. this is also true of groups looking for radical changes (rightly or wrongly) in the Pubco method of operation
Not one of the groups has been "transparent and honest" enough to put forward possible consequences of their actions should they be successful for discussion and open debate. I for one would have thought this was a fundimental requirement of groups seeking support for their causes
Ken Nason
Great to read sensible discussion from so many parties, Mary is absolutely right but Ken and Colins last posts are so valid. With a third of the tied estate unable to survive without running up more debt they cannot repay, and finances deteriorating for most other lessees, where do we go from here? Time is short. PRM set out their stall from the start on their FB site. Hitting pubco revenue with a strike and litigation seems more attractive by the day.
Competition Commission nothing less will do, let them investigate the WHOLE pubco model. Ted and Giles should welcome this, as they "run their companies so farily, honestly, and transparently" they will have nothing to fear.
Mary, the competition commission isn't the right body to deal with tied licensee issues either, they are simply a placebo placed on the table by those who had no clue in the first place but now seem to have run out of ideas, sad but true. For anyone now banking on the CC pulling a rabbit out of a hat I suggest that you take a look at their website and decide for yourselves if they offer anything outside of REGULATED industries. To save you the time, they don't. This BS has gone on long enough. The only place to get a result is in the Court because after the CC turn it down, the next recommended stop is probably the Nigerian parliament. Enough money has gone into this cause to various self elected bodies for there by now to be a return on that investment, other than self promotion and nice pix of people mixing with the glitterati.
Ken if it goes to the Competition Commission and there is no case to answer then surely that is a good thing for the pubcos. So why are they so determined that it does not go to the Competition Commission, I wonder.
Mary there is of course a very simple reason for it in that they are, like all businesses should be doing, is protecting themselves.
As I have said before until someone comes up with a solution that gives both sides an out that they can both live with confrontation with all of it's attached bad feeling will continue to the ultimate detriment of the tied sector.
Mary what if the test it results in a complete vindication of the Pubco position which way does the kill the tie take as the CC is the last throw of the dice is it not?
Ken Nason
The beer tie is illegal under European Law, we are Europeans, it's that simple.
Mary, thank god that we have someone on here who writes sense.It is nice to read your comments, as they are always sensible and factual.
Ken – that’s a risk that I’m sure the tenants would be prepared to take. Not sure the pubcos feel the same way. However, I don’t even think that you believe the pubcos and brewers will talk their way out of the barrel price anomaly.
Ken, therein lies the crux of it. Remember when Westminster, the BESC, the EU, the OFT and 'mediation' were all purported to be the Holy Grail in their turn? "Welcome to the Competition Commission The CC is an independent public body which conducts in-depth inquiries into mergers, markets and the regulation of the major regulated industries." Do you spot the problem here?
Colin- The OFT is not the right body to be looking into these complex issues as highlighted following 2004 and again by the MPs in the BEC Report. The Competition Commission is the only body that has the resources and remit to examine the issue in full. I stand by my comment that the OFT have failed pubs not least because it was not in their remit to investigate the issues. You may argue they have done what they can within the confines of what they are allowed to do but i disagree, they have mearly dipped their toes into the issue (beyond their powers) and come out saying that everything is alright with the caveat that they did not investigate fully. A full and transparent Competition Commission inquiry is the only route forward and any form of delay or indication of allowing time for the pubcos to get their houses in order is unacceptable. They have had six years to do so already.
Ken- Lets put that to the test is the simple answer. What you must ask yourself is why the likes of the BBPA and others are lobbying so hard to stop this from happening?
Just to play devils advocatt, what happens if it all goes to the competition commission and they find no case to answer? Ken Nason
Eight Bells once again an I'm all right Jack attitude, sad. sad,sad.
Join Pub Revolution and GMB, it's the only way forward now. incidently, i managed to get some more cheap beer today through my contacts in the Pub Revoltuion Movement!
Is there an election coming by any chance? The current crop of MPs are irrelevant as they all have to re-apply for their jobs in a few weeks time. CAMRA, Fair Pint and the GMB are all pressure groups with biased interests (as of course are the pubcos). You can slag off the OFT and their like but whenever any non-partisan body of intelligent people examine the pub trade the pubcos come out largely unscathed. Contracts are agreements between 2 parties - if you don't like it, don't sign up - there's lots of freehouses going bust so why not buy one?
As I see it,the Competition Commission can be the only way forward as the pubcos have had years to put their houses in order, to which they have failed miserably. The BBPA have tried to cover up the dreadful failing of the pubcos, but I think now all can this this for what it is. The tenants cannot wait any longer, and they have been extremely patient, but time has run out for the pubcos. Peter Luft I do hope that your up coming report will let all see just how badly certain pubcos operate. Enough is enough.
Mary, "OFT systematically fails publicans ", you are missing something. The OFT is there to take care of the interests of the consumer and all this hoo-hah about failing the publicans is a little wide of the mark. I would just say that as it is now published that without the tie the consumer might see a measly 30p off already inflated prices, the OFT were perfectly correct.
Well uner the Tories I had a great pub. Good custom Good buisness. Now after Labour and thier new licence Laws and high licence fees and no smoking its all ruined. Labour have destroyed the pub industry. Our Tory candidate has said she will lobby to give publicans "CHOICE". We know our buisness and our custom and should be able to choose how we run our pubs. Next we will be told what time to go to bed!!!!!!!!!!
is this man talking in riddles? he says "“But I said to her Brigid, it is, because different companies are operating in different ways… what the solutions are a competition issue and that’s why it’s right the OFT are going to take a look at it.” This leads to it having to go to the competion commission yet he wont say so. Grow some and say what needs to be done, the OFT systematically fails publicans as proven and the competition commission is the only place that this will get sorted out.