Allied given nod to lease its pubs

ALLIED Lyons is close to achieving full compliance with government orders requiring it to free 2,380 pubs from tied beer supplies, after securing Office of Fair Trading approval to lease 750 outlets to the Brent Walker leisure group, writes Jeremy Warner.

Initially the OFT voiced strong objections to the Brent Walker deal, saying the 750 pubs would continue to be treated as part of Allied's tied estate and would not count towards compliance.

The dispute promised to end in costly and protracted litigation, with Allied saying it was determined to fight the OFT's objections through the courts. However, a compromise that satisfies the OFT's concerns has now been reached.

These centred on the supply aspects of the deal. Under the terms of the agreement with Brent Walker, Allied was to have supplied the whole of BW's enlarged pubs division with two-thirds of its beer for seven years. The OFT believed that such a contract had the effect of preserving the tie in all but name and was anti-competitive.

By agreeing to reduce the minimum amount of beer Brent Walker is obliged to buy from Allied breweries each year, the company has secured OFT approval, although this has yet to be officially confirmed.

Allied believes it has lost nothing by tailoring the contract to the OFT's demands since natural demand from Brent Walker's Pubmaster retail division is in any case stronger than the minimum barrelage specified in the contract.

OFT approval means that Allied now only needs to dispose of a further 150 pubs to achieve full compliance with the Beer Orders. Whitbread needs to make a further 100 disposals, and Bass around 40.