Pubcos accused of providing misleading evidence to MPs

In its report into the tied pub business model published today, the House of Commons Business & Enterprise Committee (BEC) said that in its hearings it was given "false" evidence by the country's largest operator.

Following its four month-long investigation into the pub trade in the wake of the 2004 TISC Inquiry, the BEC's eagerly awaited report said that it had heard "impassioned" statements from many witnesses, including more than 70 lessees, with many stories being "troubling", while others were "heart-rending".

While the report said the committee heard two sides of a number of stories, members were "struck by the consistency of lessees' complaints about pubco behaviour".

Crucially, the report went on to say that while not always convinced of lessees' interpretation of events, committee members "had no doubt that they were entirely open with us".

Conversely, the report quotes that "in evidence to us both Mr Thorley of Punch and Mr Tuppen and Mr Townsend of Enterprise Inns made assertions which, on investigation, proved to give a partial picture, or on one occasion were positively false".

The report claimed that on the subject of disclosure of lessee's books the "oral evidence given to the committee by Mr Townsend was, at best, partial".

It added that while in giving evidence on whether Brulines monitoring equipment can differentiate between beer and water oral evidence from Punch Taverns' chief executive Giles Thorley - that the technology can tell the difference in density between the two liquids - was subsequently proved to be incorrect.

While it acknowledged that Punch had written to the committee two months after the hearings had taken place admitting that the system could not in fact tell the two apart, the report said: "We are disappointed that Punch misled us in oral evidence and that they have not apologised for doing so."

The report also highlighted that committee members were "surprised" that a link between financial assistance offered to some lessees and an extension of the beer tie was not made in oral evidence, although this had been made clear in a written submission.

The 88-page report challenges the industry to prove how beneficial the beer tie is by allowing its lessees the choice of opting out.

It also calls for the Competition Commission to "conduct an urgent investigation" into the tie and its consequences.

The BEC said it was "wary" of calling for the beer tie to be completely abolished "as such a move might simply increase the power of brewers or distributors" and the position of smaller, regional brewers needed to be considered.

But committee chairman and Conservative MP Peter Luff said its provisional view was that the tie should be "severely limited to ensure proper competition in the market".

In a statement Punch Taverns said the tied pub model "provides a fair and equitable approach to sharing risk between ourselves and our licensees, represents a low cost opportunity for entrepreneurs, and has a rightful place in the market.

We will be reviewing The Committee's findings in more detail over the coming days and will update the market further in due course as appropriate.

"In the meantime we strongly call on the industry to come together to focus on the real task - supporting licensees and pubs through these challenging economic conditions."