Regulator to investigate Heineken’s UK pub business

United Kingdom | Heineken’s pubs business, Star Pubs & Bars, is being investigated by the industry watchdog over suspicions that tenants on rent-only contracts are still forced to stock Heineken beers and sell them at inflated prices.

The Pubs Code Adjudicator, as the watchdog is called, said on 10 July 2019 that it seeks to find out from tenants on rent-only contracts, if Heineken tried to force them to stock an unreasonably high amount of its beer. The regulator will also ask them whether Heineken tried to influence the price at which they sold its beers to consumers.

 The Pubs Code was introduced in 2016 to give tenants of the UK’s big pub companies (“pubcos”) the chance to apply for rent-only contracts and move away from the so-called “tied leases”, which required them to buy a certain amount of beer from their pubco landlords in exchange for lower rents. Tenants used to complain that the prices of tied beers and ciders were often above the rates on the open market.

 According to the Financial Times newspaper, the Pubs Code states that under a rent-only contract, a pub company can stipulate the purchase of its own beers but this has to be at open market prices and that tenants cannot be prevented from buying competitor brands.

 This is the first time the regulator has opened an investigation into one of the large pubcos.

 Heineken managed to triple the size of its pub estate to 2,700 pubs in 2017 when it bought Punch Tavern for GBP 403 million (USD 525 million). This makes Heineken the third-largest pubco in the UK after Greene King and Enterprise Inns.