April 22, 2013 / 6:55 AM / 5 years ago

Government acts on "beer tie" to help pub tenants

LONDON (Reuters) - The government said on Monday that it would introduce new rules to clamp down on the ‘beer tie’ by which tenanted pubs are forced to buy their beer from the companies who run their leases.

Under the new code of practise, which ministers say will be backed by a “powerful” adjudicator, pub tenants will be able to complain if they are unfairly treated by landlords.

It could also mean tied pubs having the option of a ‘guest beer’ to try to ensure that they are no worse off than those who are not tied.

Many pubs have been under pressure in recent years as they struggle to survive on small margins and compete against much cheaper supermarkets.

Business Secretary Vince Cable said that pressure also comes from powerful pub companies who lease property to tenants with the condition that they also buy beer from them, often at high prices.

The plans will only apply to firms that own over 500 pubs, which includes British names like Enterprise Inns and Punch Taverns, though the government said it will review this threshold in a consultation.

Cable said that the plans would save pub tenants 100 million pounds a year.

The move comes after Chancellor George Osborne scrapped a planned increased in beer tax in March to help struggling pub companies.

Reporting By Christine Murray; editing by James Davey

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