Pub groups fizz on competition ruling

Shares in tenanted pub groups Enterprise Inns and Punch Taverns soared after the Office of Fair Trading (OFT) rejected a complaint made in July by the Campaign for Real Ale (CAMRA) blaming the system which forces pub tenants to buy beer from their landlords for the high cost of a pint.The OFT said it had not found evidence that supply ties are resulting in competition problems that hurt customers.'The OFT has found that there is generally effective competition between pubs and does not consider that supply ties contribute to higher prices or prevent pubs offering a wide choice to consumers,' it said.In its complaint, CAMRA said that the beer tie arrangement, which is operated by tenanted pub groups such as Enterprise and Punch, means many pub landlords are forced to pay over the odds by about 50p a pint, because it allows the pub companies to earn excessive costs by raising prices in the knowledge pub owners cannot buy their beer elsewhere.'Any strategy by a pub-owning company which compromises the competitive position of its tied pubs would not be sustainable, as this would result in a loss of sales,' said Simon Williams, senior director of the OFT's goods group. 'Pub-owning companies are not therefore protected from competition by virtue of the supply ties agreed with their lessees.'Shares in Punch, which has more than 7,600 pubs, climbed by 12%, while Enterprise, with a similar number of tenants, climbed 17%.