OFT: no systematic failure in pubco model

The Office of Fair Trading has recognised there may be some individual examples of poor behaviour by pubcos and tenants but there is no "systematic failure" of the tied model.

However, the OFT has not ruled out further action against the use of restrictive covenants by pubcos to stop pubs being sold as pubs.

The OFT was speaking at a media briefing for the launch of its report in response to the Campaign for Real Ale's super-complaint. It has ruled there should be no further action taken on pubcos and the beer tie.

"Although there are probably individual examples of poor strategy and behaviour by pubcos and tenants a-like, we don't see any reason to say there is a systematic failure in that respect because pubcos would be punished in the market place," said OFT senior director Simon Williams.

Asked about the possible bearing of the OFT's report on the Government's response to the Business and Enterprise Committee, Williams said: "There maybe the argument that the tie has other disadvantages that others may wish to address but its not for us to make other recommendations on that or comment on that."

But the OFT said there still could be action on the use of restrictive covenants. OFT project director Geoff Steadman said: "We don't preclude further action against the use of restrictive covenants in the future."

He said he could see circumstances where in a particular local area, restrictive covenants could raise "barriers to entry" to people who want to open a pub."

However, he pointed out that it was becoming a diminishing problem.