The Trade and Industry Select Committee's decision that the beer tie should remain for pubcos prompted a surge in share prices among the big operators as industry profits continued to grow.
The committee chairman Martin O'Neill ruled that: "The immediate quantifiable cost of the beer tie is usually balanced by the benefits available to the tenants." While the report recommended that the large pubcos tightened up their services, it also criticised new tenants who did not seek enough advice about running a pub and its finances before taking on a license.
Both Enterprise and Punch's chief executives Ted Tuppen and Giles Thorley had seen the investigation as something of a personal as well as a professional challenge. They were evidently pleased with the result. Mr Thorley said: "We broadly welcome the reports conclusions… the Office of Fair Trading has announced there are no competition issues in the sector requiring further action."
Peter Hanson, principle of PC Hanson, believes investment in the pubcos will continue to roll. "Following the Select Committee report the pub companies will remain an attractive area of investment," he predicted.
"These companies exist in quite a benign financial environment, with low interest rates and banks willing to lend, and have done so for several years," Mr Hanson continued. "This is why they have continued to have huge run-ups in share prices and as the industry continues to bring in better tenants, helped by the tie, it will continue to prosper."