Parliamentary Save the Pub Group chair Greg Mulholland (Lib Dem), BIS Select Committee chair Adrian Bailey (Lab), and Select Committee member and Save the Pub Group president Brian Binley (Con) tabled the clause at the weekend "to give pub company publicans a fair deal".
The MPs said MRO would "come in gradually only at certain trigger points", including lease/tenancy renewals, rent reviews, change of terms or change of pub company. They say this will enable sustainable pubcos to "evolve their tied models and ensure they are fairer and attractive".
The clause states that large pubcos that also brew beer will be able to insist on their brands being sold in their tenanted and leased pubs, but the tenant would be free to buy them from anywhere.
It states that the MRO option would involve a 21-day period of negotiation followed by a 90-day period of assessment undertaken by an independent expert agreed by the two parties (or appointed by the RICS Chairman if they cannot agree).
After this date the tenant has the right to pay the assessed MRO and can choose where to buy his/her beer, it adds.
Government response
The Government’s response to the pub statutory code consultation in June stopped short of including a mandatory free-of-tie or MRO option, stating that it “would have been likely to cause a high degree of uncertainty in the industry”, with a likely negative impact on investment, the possibility that several pub companies would abandon the tied market and the risk of higher levels of closures and job losses.
However, Mulholland, Bailey and Binley argue that MRO is "a simple, cheap to administer and market based solution", that would force large pub companies to ensure their tied agreements are "competitive, fair and attractive to tenants".
They added that unlike the parallel rent assessment process proposed in the Bill, the MRO option would require little adjudicator participation, which will reduce costs and workload, and there will be no cost to the Government or taxpayer.
The clause, which would only apply to companies who own more than 500 pubs with at least one tenanted/leased site, will be voted on at the report stage of the Small Business, Enterprise and Employment Bill on the 18 and 19 November.
It has the support of campaign group Fair Deal for Your Local, which is backed by 212 MPs and ten trade associations, including Campaign for Real Ale, the Federation of Small Businesses and the Guild of Master Victuallers.
'The option will stop the abuse of the tie'
Mulholland said: "MPs up and down the country know from their own constituencies that pubco publicans have been treated badly and charged unfair and unrealistic rents and rip off prices for beer, that their own MP could buy much cheaper.
“It really is time to resolve this issue once and for all and the only sure way to do this is to include the market rent only option for pubco tenants in the measures being introduced.
"The market rent only option, as clearly laid out in the new clause, is reasonable and gradual and simply provides an option to tenants to choose at appropriate times whether to carry on with a tied agreement or to have a rental only agreement. This option will stop the abuse of the tie and will lead to sustainable companies offering real tied agreements, offering genuinely lower rents for higher beer prices."