Warning from Vaux against interference

Any further interference with the tied-house system could lead to the demise of the British pub as we know it, Sir Paul Nicholson, chairman of the Brewers and Licensed Retailers Association, has warned.

Calling the surprise investigation by the Office of Fair Trading into wholesale beer prices a "total over-reaction", Sir Paul said the announcement on Tuesday had already caused enormous damage - with Vaux, his own company, losing £40m in value. On the stock market Vaux shares have slipped 12p to 216p since the OFT investigation was announced.

Share prices of most regional brewers fell yesterday as a belief grew among investors that the effects of the price inquiry could spread well beyond the big five companies at which it was originally thought to be aimed.

Sir Paul said the reaction of association members at a council meeting yesterday was, "Oh Lord, not again - this is the 33rd inquiry since 1966."

There was also a sense of frustration because "what the customer puts on the bar for a pint gives the best value in Europe". The more the Government interfered with the market the greater the disbenefit to the customer, he said.

Sir Paul attacked the purist view that vertical integration in the industry was wrong and described the idea that brewers could be prevented from owning the properties through which they supplied beer as a simplistic solution that would be to the detriment of customers.

Forms of tied-house agreements were as widespread in many countries of the EU, particularly Germany, as in Britain.