This is the first investigation by the PCA and follows a period of engagement with Star. The adjudicators said they 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 the period from 21 July 2016 when the Pubs Code became law to 10 July 2019.
The Pubs Code regulates the contractual relationships between all pub-owning businesses and their tied tenants, who are obliged to purchase some or all of the alcohol to be sold at their pubs from their pub-owning business.
The investigation will look at whether the pub group’s tenants have been forced to stock only Heineken or an unreasonable amount of its brands. Dickie also hinted that other pub groups may face similar probing.
Six pub companies are currently covered by the Pubs Code: Admiral Taverns Ltd, Ei Group Plc (formerly Enterprise Inns Plc), Greene King Plc, Marston’s Plc, Punch Taverns Limited and Star Pubs and Bars Limited.
Paul Newby, the PCA, said: “Fiona Dickie and I have decided to launch this investigation to understand the extent to which the Pubs Code may have been breached and the potential impact on Star tenants.”
Fiona Dickie, the deputy PCA, added: “Where tenants of a brewer business regulated by the Pubs Code exercise their right to ask to go free-of-tie they may still be required to stock that brewer’s beer or cider within limits set out under the Pubs Code. This 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.”
She added: “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.”
As part of this call for evidence, the PCA and deputy adjudicator want to hear from Star tenants who have been offered tenancy terms following service of a MRO notice that included a requirement for all (or virtually all) of the keg beer stocked to be produced by Heineken; a requirement to stock brands produced by businesses other than Star or group undertakings of Star; any other requirement to stock an unreasonably high proportion of Heineken brands or brands in which Heineken has a commercial interest and a term that seeks to influence the retail selling price of Heineken brands or brands in which Heineken has a commercial interest.
A Star Pubs and Bars spokesperson said: “This 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.”