Whitbread deal sparks probe calls

Pub mergers prompt fears for consumer choice

BRITAIN'S pub industry is braced for a second shake-up in 10 years amid fears that the rampant pace of consolidation is impairing choice and driving regional brewers to the wall.

The Office of Fair Trading is set to launch an inquiry following the announcement of Allied Domecq's plan to sell its 3,600-strong pub estate to Whitbread. There is concern that the deal, which would leave Whitbread with more than 7,000 outlets, is concentrating pub ownership in even fewer hands.

In addition, Whitbread's plan to dispose of its brewing interests is expected to lead to further concentration of production. This consolidation has reached such a peak that many industry figures are drawing parallels with the situation in the late 1980s, when the dominant influence of the big six brewers prompted the Government to introduce the Beer Orders to dilute their power.

Philip Shaw, an analyst at Panmure Gordon, said: "The Government has not looked at the way that companies acquiring huge numbers of pubs can tie tenants into tight supply agreements."

His is one of a number of voices calling for an update of the Beer Orders, which are generally judged to have failed to prevent restrictive practices in the industry.

The Office of Fair Trading will decide next month whether to recommend an investigation by the Competition Commission, formerly the Monopolies & Mergers Commission.

The Campaign for Real Ale has already asked for a referral, and the OFT is seeking submissions from other interested parties.

The 1989 Beer Orders forced the big brewers to sell many of their pubs to reduce their influence. However, the rules only apply to companies that also brew beer. There is no limit to the number of pubs that emerging pub companies like Punch Taverns, Pubmaster and Enterprise Inns can own.

However, Giles Thorley, who runs the Unique Pub Company's 2,641 outlets, denies that the emergence of big pub companies has impaired choice. "Our pubs can choose from any of the top four lagers, Carling, Carlsberg, Fosters and Heineken," he said.

There is also concern that smaller, regional brewers are struggling to survive.

On Friday, East Anglia's Greene King announced an agreed bid for Morland of the West Country in a deal that is believed likely to mean the closure of the latter's brewery in Abingdon.