Heineken’s pubs and bars business is being investigated by the industry watchdog amid concerns it forced unfair terms on pub tenants looking to break free of the “beer tie”.
The Pubs Code Adjudicator (PCA) said it had grounds to suspect Star Pubs & Bars may have breached the code by using unreasonable stocking terms on pubs who choose to cut the so-called beer tie.
The probe – the first ever for the PCA – covers the period between July 21 2016, when the pubs code became law, and July 10 this year.
Under a “tied” lease, pub tenants must buy a certain amount of beer from their landlords, but they can ask to break free of the tie using a “market rent only” option.
This arrangement means they may still be required to stock the brewer’s beer – but strict limits have been set on how much they are obliged to buy since the pubs code came into effect.
Paul Newby, the pubs code adjudicator, said the PCA “decided to launch this investigation to understand the extent to which the pubs code may have been broken and the potential impact on Star tenants”.
Fiona Dickie, the deputy pubs code adjudicator, 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.”
The PCA will now ask Star’s pub tenants whether the company tried to force them to stock just Heineken keg beer, or an unreasonable volume of Heineken brands or other drinks in which the Dutch brewer has a financial interest.
It will also ask them whether Star tried to influence the retail price of its brands under the arrangement.
It has set a deadline of 5pm on August 7 for evidence to be submitted.
Ms Dickie said: “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.”
Heineken tripled the size of its UK pubs business with the £403 million takeover of Punch Taverns in 2017 and now has around 2,700 pubs in its estate.
A spokesman for Star said the group was co-operating with the PCA and would “robustly” defend its position.
Star also stressed the investigation relates just to those tenants on market rent only contracts – a small proportion of its total pub estate.
The spokesman said: “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.”