Punch Taverns, Enterprise Inns and Admiral Taverns, as well as the British Beer & Pub Association (BBPA), have said the plans for the pubs code as currently presented could give rise to legal challenges.
However, anti-pubco campaigners have rubbished the allegations, referring to them as “scaremongering”.
The attacks from the pubcos came in the form of written submissions to the Small Business, Enterprise & Employment Bill Committee, which met for the first time last week.
Until then, the companies had remained relatively quiet on the Government’s long-awaited proposals for regulating their relationship with their tied tenants.
However, in an outspoken attack last week, Punch Taverns said suggestions that the pubs code adjudicator could set rents in the event of a breach of the code, would risk infringing the European Convention on Human Rights.
Admiral agreed that arbitrating on rental valuation would be “open to legal challenge on competition and human rights grounds”.
Swinson letter
The fury of the pubcos centres around an open letter from Business, Innovation & Skills minister, Jo Swinson, in which she said: “If the adjudicator finds that there has been a breach of the code in relation to the parallel rent assessment (a feature of the enhanced section of the code which requires pubcos to say what a tied tenant would pay if they were free-of-tie) then one of the remedies available to him is to set the tied rent figure so that the projected profit is equal to or greater than under the free-of-tie scenario”.
Enterprise said the comments went “much further than the position taken by the Government in the original consultation and the response”.
It added: “We do not believe that this is necessary, desirable or realistic, or consistent with law and practice elsewhere in the commercial property market.”
Punch Taverns said: “By allowing the adjudicator to intervene in individual rent disputes, and enforce a transfer of value from pub company to tenant, the parallel rent assessments represent a direct interference with the pub companies’ property rights as protected by ECHR.”
Imbalance
The company also said the Government had failed to prove there was an existing imbalance in the relationship between pubcos and their tied tenants.
Its statement said: “Statutory intervention, as set out in the bill, also amounts to abolishing the tie ‘by the back door’, with serious adverse effects on tenants and the wider economy.”
However, Fair Pint campaigner, Simon Clarke said the ECHR relates to a “natural or legal person” who has been directly affected by an alleged violation, and therefore the pubcos would not qualify.
He concluded: “The pubcos are seeking to employ the same scaremongering, intimidatory and bullying tactics usually employed against their tenants.”
Read all the submissions to the committee here.