Rawlison Butler Commerce & Technology Partner Mark O’Shea assesses the outcome of CAMRA’s super-complaint to the OFT on tied supplies in the brewing industry and considers the wider implications for other businesses.
Although the super-complaint and OFT’s decision directly relate to smaller, independent brewers and tied landlords, they also highlight how competition law issues can impact on commercial practices previously regarded as normal and/or acceptable.
Background
CAMRA (the Campaign for Real Ale) lodged a “super-complaint” with the Office of Fair Trading (OFT) in July 2009.
The complaint centred on the brewing industry’s practice of ‘supply’ or ‘beer’ ties. These effectively mean that breweries and other pub-owners can compel their tied pub landlords to purchase beer solely through them.
CAMRA, which describes itself as “an independent, voluntary, consumer organisation which campaigns for real ale, real pubs and consumer rights”, alleged that this practice was anti-competitive in that it:
- Protected pub-owners from competition resulting in higher prices for consumers due to the inflated prices and rents charged to tied pubs; and
- Gave rise to the failure of smaller, independent brewers who were unable to access tied pubs directly.
Super-complaint
Under the Enterprise Act 2002, designated consumer bodies can make a super-complaint which is defined (by section 11(1) of the Act) as a complaint brought by a designated consumer body that “any feature, or combination of features, of a market in the United Kingdom for goods and services is or appears to be significantly harming the interests of consumers.”
In October 2009 the OFT said it had found no evidence of competition problems that were adversely affecting consumers, and would be taking no further action. However, following CAMRA’s appeal to the Competition Appeals Tribunal, the OFT re-opened the matter.
Decision
On 14 October 2010, the OFT concluded that the pub sector in the UK is “overall competitive” having found no evidence of competition problems adversely affecting consumers. It will therefore be taking no further action.
According to the OFT’s press release, “the OFT has concluded that the beer tie has not prevented tied pubs from offering a wide choice of beers to consumers, having found that pub-owning companies generally source beer from a considerable range of suppliers, including smaller brewers”.
Reaction
On its website, CAMRA state that the decision “will not stop [it] from continuing its campaign to secure reform of the beer tie, which has the support of all political parties, the Government and the Commons Business Select Committee”.
Mike Benner, Chief Executive of CAMRA is quoted as saying:
“CAMRA’s initial reaction to the OFT’s decision is that it is based on a blinkered and selective consideration of the evidence. …
The OFT recognises the concerns of tied pub landlords but has failed to recognise the impact of these on consumers. …the OFT appears to have dismissed as irrelevant the treatment of tied pub landlords by the large pub companies. …
The OFT’s own analysis recognises that tied pub landlords on average pay around £20,000 more for their beer every year as a result of being tied and unable to purchase beer on the open market. CAMRA, unlike the OFT, recognises that higher costs imposed upon tied pub landlords will inevitably be passed onto consumers through higher prices, under investment and pub closures.”
With CAMRA vowing to fight on, one thing is for sure – we’ve not heard the cry of ‘time gentlemen please’ on this particular issue.
For further information on this or any other franchising issue and/or in relation to minimising your liability risk for misrepresentation and breach of contract, please contact Mark O'Shea by emailing Mark or by calling him on 08450 990045, or speak to your usual contact in the Commerce and Technology Team.
This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this document.