Financial News

LONDON (ShareCast) - The Campaign for Real Ale, CAMRA, has launched a 'super-complaint' to the Office of Fair Trading (OFT), blaming high rent prices and the system which forces pub tenants to buy beer from their landlords for the high cost of a pint.

A super-complaint is a complaint made by a consumer body such as CAMRA about a perceived situation that damages the consumer interest. Within 90 days of receiving a super-complaint the OFT must say publicly how it proposes to deal with it.

CAMRA's complaint comes two days after the British Beer & Pub Association (BBPA) said the rate of UK pub closures reached 52 per week in the first half of the year, the steepest rate of decline since records began in 1990.

"Exploitation of 'beer tie' agreements and the unfair method of setting pub rents are harming consumers and society as a whole," said CAMRA chief executive Mike Benner.

Tenanted-pub groups Enterprise Inns (LSE: ETI.L - news) and Punch Taverns (LSE: PUB.L - news) both operate under the 'beer-tie' model.

CAMRA said that the beer tie arrangement 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.

"This practice has led to higher prices in pubs and has widened the gap between pub and supermarket prices encouraging people to shun the pub for their armchair," Benner said.

It added that pub tenants should not be barred from buying locally brewed beers.

"It is crazy that local brewers are prevented from selling their beers to local pubs," said Benner.

"We believe a 'guest beer' regulation, so that 'tied' pub landlords can buy a guest real ale from a brewer of their choice, should be introduced to overcome this."

While Camra wants reform of the beer-tie model, Benner says it still favours the model and says its complete abolition would "turn the current storm of pub closures into a hurricane and lead to increased domination of the beer market by global brewers."

He said the current rent system is open to abuse as it ignores the fact that pub landlords have to pay above market prices for beer and other products.

"An independent and affordable rent dispute system is urgently needed to avoid pub landlords being forced into agreeing excessive rents because they cannot afford to contest it," he said.

Last week, Enterprise Inns, which has been hit hard by the economic downturn, said said its underlying trading performance appears to be stabilising, with the rate of decline in beer sales reducing. The firm has sold 277 pubs so far this year as it seeks to reduce its debt pile.