Heineken’s UK pub arm Star Pubs & Bars has been put under special surveillance of the Pubs Code Adjudicator (PCA) and could face a severe million pound penalty of up to 1 percent of its annual UK income. “We suspect that [Star Pubs & Bars] has breached the pubs code by offering unreasonable stocking terms to tenants seeking to go free of tie,” Fiona Dickie, deputy pubs code adjudicator, told The Morning Adviser.
Paul Newby, pubs code adjudicator, said in a statement: “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’s tenants.”
“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,” he added.
The investigation will cover the period between July 2016, when the pubs code came into effect, and today. It applies only to around 111 of all 2,700 Star pubs which requested the Market Rent Only (MRO) option. The MRO was introduced to protect tenants against large pub companies that oblige them to buy beer and other drinks from their landlords often at a large mark-up. The PCA will investigate whether Star Pubs & Bars respectively has attempted to force tenants to stock an unreasonable high volume or even exclusively Heineken brands.
However, the regulation concerning stocking requirements is not very clear.
According to a PCA advice notice from March 2017, “a stocking requirement is a contractual obligation in a tenancy/licence that requires a tenant/licensee to stock the brewing POB’s [pub-owning business] beer or cider, but does not require them to buy it from a particular supplier.”
In detail, the advice notes defines the stocking requirement as follows: “To be a stocking requirement the obligation cannot require the tenant to procure the beer or cider from any particular supplier or prohibit the sale of other beer or cider produced by other brewers. However a stocking requirement can include restrictions on the sales of other beer or cider products in other ways - so long as this does not amount to a prohibition on such sales. For example an obligation may require a % of the tenant’s/licensee’s stock to be made up of the brewing POB’s beer or cider, but it cannot directly ban the sale of another beer or cider that is not brewed by the POB.”
A spokesman of Star Pubs & Bars also made clear that the regulation is vague. “While the principle of the brewer’s stocking requirement is clear, this part of the new regulation is complex and not clearly defined in the pubs code. We, therefore, hope this investigation will provide the certainty and clarity that we have sought repeatedly over the past three years.”