Consultation published on regulating the treatment of pub tenants

On 22 April 2013, the Department for Business, Innovation and Skills (BIS) published a consultation paper on proposals for regulating the relationship between pub companies and their tenants.

The consultation states that the government has concerns over the unfair treatment of pub tenants and that self-regulation by the pub trade has not done enough to improve their position. The consultation seeks views on proposals for ensuring that pub tenants are treated fairly and that tenants subject to a beer tie should be no worse off than a tenant without such a tie. While the consultation paper contains a number of proposals in respect of beer and gaming machine ties, the consultation is not concerned with any competition issues.

The consultation proposes a formal statutory code (code) for companies with more than 500 public houses, which will regulate the relationship they have with all of their pub tenants (not just the ones that are subject to a beer tie). A draft version of the proposed code is annexed to the consultation paper.

The code would be enforced by an adjudicator, who would have the following functions:

Arbitration, which comprises setting an open market rent for the premises, ensuring that the rent has been calculated fairly.
Investigation, which would enable the adjudicator to undertake investigations where there was reasonable grounds for suspecting that a pub company was in breach of the code.

The consultation closes on 14 June 2013.