Brussels gives clearance on Whitbread tied pubs

Whitbread, one of the UK's biggest brewers, was yesterday given provisional clearance by the European Commission to continue operating its tied pub chain. As Chris Godsmark, Business Correspondent, reports, the move could influence a row involving lessees in hundreds of pubs run by the former Inntrepreneur Pub Company.

The Commission's announcement was the first in a series of parallel investigations into tied pub arrangements by the main UK chains. In a statement the EC said it planned to give retrospective approval to Whitbread's tie agreements, a move which it said could have implications for other, more controversial pub ties where lessees were suing the pub companies.

Though tied pub agreements have been covered by a block exemption from the Commission, excluding them from European competition law, the EC has been investigating the ties individually. The EC's statement admitted that Whitbread's lessees paid more for their beer than other operators, but found that they gained benefits in return in the form of lower rents, help with investment spending and management expertise.

``In those circumstances, the Commission considers that the tied lessees can compete on a level-playing field with their `free-trading' competitors, and that an exemption consequently seems acceptable," the statement added.

Simon Ward, Whitbread's strategic affairs director said the announcement was a "big step on the way to final clarification" that the company's leases were legal. "There have been no complaints from our lessees to the Commission," Mr Ward added.

The issue of tied pubs had aroused intense controversy in the brewing industry. Camra, the real ale lobby which supports the tie, said the news would give other lessees greater certainty about their businesses. "We welcome this because it clarifies the position for Whitbread's long- suffering tenants," a spokesman said.

The Commission indicated it would make an announcement about the former Inntrepreneur chain, where several hundred lessees are embroilled in legal actions with the management, in a few months' time. Last week Nomura, the Japanese investment bank, paid pounds 1.2bn to buy the Inntrepreneur pubs, along with Spring Inns, from their joint owners, Foster's of Australia and Grand Metropolitan.

Many Inntrepreneur landlords have complained that they gained no commercial advantages from the tie, despite the restrictions it imposes. Group Action, which represents some 250 disaffected lessees, said last night that the EC's decision for Whitbread pubs did not mean it would approve the Inntrepreneur agreements.