OFT tie probe 'not a waste of time and money'

The Office of Fair Trading (OFT) yesterday defended itself against accusations that its investigation into the effects of the beer tie on consumers was a waste of time and money.

Ninety days after CAMRA submitted its 'super complaint' against the tie the OFT effectively gave the pub industry a clean bill of health, albeit with some caveats, notably the areas of rent negotiations and restrictive covenants which while not within its remit to investigate had given some cause for concern.

Speaking as its enquiry report was published, Simon Williams, a senior director at the OFT, said it was his organisation's conclusion that a decent level of competition existed within the pub industry and that from the consumer's perspective the tie did not require further investigation.

He said some people would take the view that his investigation, carried out by a team of five OFT researchers, was a waste of time and resources, "depending on their point of view".

"The evidence [gathered by the OFT] doesn't justify a full Competition Commission enquiry," he added.

"Our conclusion is the beer tie isn't a competition issue. The tie may create other problems, but that wasn't for us to judge throughout this process," he said.

The pub industry in the UK "isn't a concentrated market", Williams added.

"There is respectable competition in the UK pub industry," he said. There was also restraint preventing complete freedom for pubcos to abuse their relationship with tenants, he added.

While the OFT was "very aware of the differing views to do with the tie", Williams said the organisation felt supply deals "were not pernicious".

Acknowledging that all was not rosy in the pub garden, Williams said he had "modest concerns" on the subject of restrictive covenants, where pubcos can demand that a pub which they sell may not continue as a licensed premises, although he argued it was a "diminishing issue".

He also recognised that some tenants were dissatisfied with the relationship with their landlords: "It's not in the interests of a pubco to create an environment where its own profitability and that of its tenant are affected."

Noting that "we'd all like to see licensees in a happier place than where they are now", Williams said there were other factors related to the price of beer sold in a pub - such as the location of a given establishment - and that what price disparities there were had little to dowith competition issues.