OFT investigates Inntrepreneur

Trading watchdog brought in as landlords complain of high beer prices to tied houses

The Office Fair of Trading is investigating the ownership of 6,000 current and former pubs of Inntrepreneur, the retailing joint venture between Grand Metropolitan and Fosters.

The news comes as solicitors acting for120 landlords in dispute with Inntrepreneur have asked the Serious Fraud Office to probe the ownership arrangements in relation to information given to the OFT and Department of Trade and Industry.

The controversy comes at a sensitive time for Inntrepreneur. It wants the OFT to release it from undertakings that would force it to cut lucrative supply ties to 2,900 pubs that it still owns directly.

It is also still negotiating the sale to Japanese bank Nomura of 1,400 other tied pubs, which have been parked since May in Spring Inns, a company set up for the purpose.

Nomura has already taken control of 1,750 pubs owned by Phoenix Inns, which Inntrepreneur hived off in a pounds 254m mirror-image exercise last year.

Landlords, however - who are up in arms over punitive rents and supply deals - allege that continuing links between Inn-trepreneur, Grand Met and Fosters and all the pubs may be in breach of the undertakings given to the OFT and DTI.

Those followed Inntrepreneur's creation in 1991 with 8,450 pubs and the Government's "Beer Orders", which sought to cut the dominance of big brewery- owned chains. Inntrepreneur is arguing that Fosters' subsequent sale of Courage, the brewer, to Scottish & Newcastle has eliminated the need to cut the tie and restrict its estate.

"The application hasn't reached a conclusion yet and is still in the system," an OFT spokesman said this weekend.

"The Office is looking at the merger of Phoenix and Spring Inns, and in the course of that we will be looking at the competition aspects of all the ownership arrangements."

Landlords, represented by solicitor Mark Barron, say they cannot compete with free houses such as JD Wetherspoon, which pay half the price for beer.

In a class action now being agreed, they also argue that such punitive ties are illegal under European law.

Last week, over 50 landlords resolved to take their complaints to the DTI. A new action group - Group 2000 - has been formed. Its leader, former publican Martin Moore, is meeting with Inntrepreneur chief executive Michael Foster on Monday.

Two aspects of Inntrepreneur's complex web lie at the heart of the fresh dispute.

The company still owns the legal title to the Phoenix and Spring Inns pubs, while ownership of both business operations lies in two Jersey trusts, administered by insurer Guardian Royal Exchange.

"Recent events have shown there are a number of legitimate concerns about the nature of the relationship between Inntrepreneur, Phoenix, Spring Inns and Nomura. I have taken up my concerns with the SFO," Mr Barrow said.

Inntrepreneur and Nomura, however, insist that there are no links between Phoenix and the Grand Met venture. Guy Hands, Nomura's managing director, said the Jersey structure was set up for tax reasons and the title retention was simply to save some pounds 2.5m of stamp duty.

Nomura is also understood to be furious that Inntrepreneur chose to ape Phoenix by parking Spring Inns in a Jersey trust. "It completely muddies the waters. They wanted to announce they'd sold it. In reality what they've done is to copy our structure to get Spring off balance sheet," another Nomura source said.

Both companies hope to complete the final sale of Spring Inns to Phoenix before Christmas, when all the property titles will pass over.

It is understood that the two sides are haggling over pounds 10m, including the tab for stamp duty, but the sale price will be around pounds 250m, against the pounds 262m put up by a NatWest-led bank consortium in a refinancing in May.

Grand Met and Fosters have underwritten the debt and will share any profits or losses on the transfer. In the meantime, Inntrepreneur executives are managing Spring Inns - another bone of contention with angry landlords.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
musicOfficial chart could be moved to accommodate Friday international release day
Wes Brown is sent-off
Italy celebrate scoring their second try
six nations
Glenn Murray celebrates scoring against West Ham
footballWest Ham 1 Crystal Palace 3
Arts and Entertainment
Drake continues to tease ahead of the release of his new album
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower