Heineken’s bar business Star Pubs to be investigated by PCA
The Pubs Code Adjudicator is investigating whether Star Pubs & Bars is coercing some sites into only buying and selling beer from its parent company Heineken, despite trying to cut the beer tie; a centuries-old agreement which means that publicans can only buy beer from the owner of the premises.
The PCA has launched its first investigation into Heineken’s on-trade business Star, after concerns were raised that the company could be imposing unfair
The investigation applies to to pubs which request a Market Rent Only (MRO) option for their lease, which allows sites to sever the beer ties other pubs are bound to.
The MRO option came into effect in July 2016, with the aim of giving tenants more rights and greater protection when dealing with large pub companies that own tied pubs.
Tied tenants of pubs had been obliged to buy beer and other drinks from their landlords, often at a large mark-up, in exchange for reduced rent payments.
Pub landlords will be asked whether Heineken has attempted to force them into stocking only the beer giant’s brands, or a high volume of brands that it has invested in.
Around 111 of Star’s pubs are leased under an MRO option.
A statement from the PCA said that it had “reasonable grounds to suspect that Star has failed to comply with the Pubs Code by using unreasonable stocking terms in proposed free-of-tie Market Rent Only (MRO) tenancies.”
The investigation will cover Star’s dealings with tenants from 21 July 2016 – when the Pubs Code became law – to 10 July 2019.
However, a spokesperson for Star Pubs & Bars said the investigation applies to “a very small proportion of our total pub estate – fewer than 5% of our 2,700 pubs.”
“The legislation is clear that as a brewer we have the right to ensure that the pubs we own sell our beer and cider. This reflects the significant ongoing investment we make and the jobs we support in our UK breweries, cideries and supply chain. While the principle of the brewers stocking requirement is clear, this part of the new legislation is complex and not clearly defined in the pubs code.
“We therefore hope that this investigation will provide the certainty and clarity that we have sought repeatedly over the past three years. We will of course cooperate fully with the PCA whilst robustly defending our position”
Calling on Star tenants for further information, Fiona Dickie, the deputy adjudicator, said the investigation concerns “whether Star has been going beyond those limits by offering non-compliant terms.
“It is important that Star tenants and other interested parties provide us with information to support this investigation. Their information will help us to determine whether the Pubs Code has been broken and, if so, what further action should be taken.
“Any tenants and other interested parties who provide information for the purposes of the investigation will not be identified in the investigation report without their consent.”
The PCA investigation will ask tenants who were offered terms in an MRO agreement that included the following, regardless of whether those terms were accepted:
a) A requirement for all (or virtually all) of the keg beer stocked to be produced by Heineken.
b) A requirement to stock brands produced by businesses other than Star or group undertakings of Star.
c) Any other requirement to stock an unreasonably high proportion of Heineken brands or brands in which Heineken has a commercial interest.
d) A term that seeks to influence the retail selling price of Heineken brands or brands in which Heineken has a commercial interest.
Nik Antona, the chairman of the Campaign for Real Ale, said the investigation “will help provide clarity on Market Rent Only (MRO) terms from one pub company, but we need wider investigations on whether all pubcos are abiding by the spirit of the Code. “We want to see greater enforcement powers for the PCA to deter pub companies from unfair and unlawful behaviour in the first place.”