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13th May, 2009, 05:36 PM
MPs Call For Urgent Probe Into Pub Industry
MPs have called for an urgent competition probe into the pub industry amid fears ties between pub firms and licensees are forcing up prices for drinkers.
A survey found many pub licensees are struggling to make a living
The Business and Enterprise Select Committee says the current practice of companies forcing their tenants to buy drinks from them should be "severely limited".
They say there are "strong indications" the so-called 'beer tie' pushes up the cost of drinks for customers.
The MPs claim it has also led to an "ever increasing disparity" between the price of beer in pubs and off-licences.
An independent survey commissioned by the MPs found almost two-thirds of lessees did not think pubcos added any value.
Dozens of pubs are closing every week
The survey also found 67% of tenants earned less than ?15,000 a year.
Partly because of the recession, an average of 39 pubs closed every week in 2008, compared with eight in 2004.
"It is to the overall detriment of the consumer if pubs are forced to close due to uncompetitive practices in the market," the report added.
The practice of pubcos selling sites with clauses preventing them from being used as pubs was also criticised as anti-competitive by the MPs.
"We believe it is for the market to decide whether a pub is unviable and not for a pubco to restrict a building's use," they said.
MPs have called for an urgent competition probe into the pub industry amid fears ties between pub firms and licensees are forcing up prices for drinkers.
A survey found many pub licensees are struggling to make a living
The Business and Enterprise Select Committee says the current practice of companies forcing their tenants to buy drinks from them should be "severely limited".
They say there are "strong indications" the so-called 'beer tie' pushes up the cost of drinks for customers.
The MPs claim it has also led to an "ever increasing disparity" between the price of beer in pubs and off-licences.
An independent survey commissioned by the MPs found almost two-thirds of lessees did not think pubcos added any value.
Dozens of pubs are closing every week
The survey also found 67% of tenants earned less than ?15,000 a year.
Partly because of the recession, an average of 39 pubs closed every week in 2008, compared with eight in 2004.
"It is to the overall detriment of the consumer if pubs are forced to close due to uncompetitive practices in the market," the report added.
The practice of pubcos selling sites with clauses preventing them from being used as pubs was also criticised as anti-competitive by the MPs.
"We believe it is for the market to decide whether a pub is unviable and not for a pubco to restrict a building's use," they said.