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The beer tie and competition law: notes

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The current cost of a barrel of carling is 340 + v.a.t.(DATED 20/12/06)

A large pubco will receive more than 160 per barrel discount.A small freehouse will receive more than 100 per barrel discount. A small tenancy will receive less than 40 per barrel discount. Given that a tenancy is to be no worse off than a freehouse how can this be right?

The freehouse owns the property and will benefit from any property price increases. The freehouse can manipulate the price he sells at to apply pressure to his tenant competitor. The freehouse if he expands adds value to his property and therefore benefits from increased equity. A tenancy wishing to expand has to borrow from the pubco and usually pays the money back through an increase in rent which is usually set to be paid back over a maximum of 7 years. At the end of this period the rent does not reduce and the tenant does not benefit in any increase in the value of the property. The tenant has to improve the pub performance in order to pay the increased rent. The pubco benefit continuosly from increased beer sales disproportionately to their efforts.

If this is fair trading practice we would all be satisfied and reaping the benefits of our efforts. Clearly the number of closures and bankruptcies tell the real story. We need help and we need it now.

Pub companies are in breach of European competition law only they are protected by the exclusion of article 81 and 82 of the treaty of Rome in the UK. As a lessee to a large pub co. my business is restricted by: 1) Having to purchase all beer stock from the pub co. thus having to pay high prices that will have a direct effect to my gross profitability. 2)I am unable to compete with other pubs in the area. 3) My business has been restricted by the pub co.

An example: Marston's pub Company sell beer to it's managed houses at around 7 per gallon and to the free trade at around 6 per gallon, but sell to its tennants and lessees at around 12 per gallon ex VAT. Until this extorsion is rectified there is very little hope for tennants. One area manager said to me in a meeting 'We do not care if tennans or lessees are successful in the Midlands; we will opt to buy more pubs in the affluent South of England' and another said 'We cannot reduce our beer prices because we are not a charity'

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Last changed by Anonymous at 7:08 PM on Sunday 16 May 2010.

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Reckon Open "The beer tie and competition law: notes" 2010-05-16T19:08:06