From the HBD Archive
From: (But I'm feeling MUCH better now)
Subject: Monopolies and Mergers Commissions Report on UK Brewing Industry
Date: 1989-04-14 12:53:30 GMT

The following is a flyer, apparently added a the last minute, to the April
1989 issue of What's BREWING (the newspaper for the Campaign for Real Ale).

Newspaper of the Campaign for Real Ale

MMC report

CAMRA'S POLICIES on the increasingly monopololistic position in the UK brewing
industry have been totally vindicated by the Monopolies and Mergers Commissions
report into the supply of beer in the UK>
The main recommendations of the report are.

* A ceiling of not more than 2,000 tied pubs to be owned by an individual
brewery or group: this includes tenanted and managed houses.
<A Tied Pub is owned by the brewery and hence serves mainly/only that
brewery's beer. Since almost all pubs are tied, this tends to restrict
the choice of beer you can drink in the UK.>
This will mean the divestment of 22,000 pubs by the big six brewers as no
regional or local brewer currently owns more than this number. Breweries will
have three years to carry out the MCC recommendation.
<The Big Six are the major brewing conglomerates including (Can I remember
them?) Bass, Watney, Whitbread (bad reputation with the real ale drinkers),
Allied, Scottish & Newcastle, and ?>

* Pubs being sold should have no covenants attached restricting a new
owner to the former brewery's products.
Also there should be no sales of pubs with covenants which preclude them
from being used as pubs in the future.

* The elimination of all loan ties. Existing loans should be allowed to
run their course.
<The breweries make large loans to pubs on the condition that the pubs
sell mainly/solely that breweries beer. Again this makes it VERY hard
for small breweries to compete, and extremely difficult for new, small
breweries to enter the market.>

* Tennants should be allowed to buy a minimum of one draught beer, free
of the ties. Also there should be no tie at all for wines, cider, soft drinks.

* Brewers should publish wholesale price lists which set out the discounts
that are available.
<Do they keep them secret now?>

In its report the MMC is scathing about the state of the industry. It targets
its recommendations specifically at the Big Six and has set the ceiling
on pub ownership in order to boost the position of the independents. It
recognises the complex nature of the industry -- with vertical and horizontal
integration--and has not made sweeping changes which would have been
disastrous for the regionals.

The report is an historic victory for the consumer. Buy ensuring the
survival of the smaller brewers, outlawing loan ties and forcing brewers to
compete on wholesale prices, the MMC has paved the way for genuine choice and
price reductions for drinkers.

By ensuring the survival and expansion of the independent regional and local
breweries, the commission has moved to protect Britain's unique brewing
heritage. The commission also noted that the price of beer had risen by 15
per cent above the retail price index between 1979 and 1987, almost double the
rise in restaurant prices. The report adds that brewers have exploited their
monopoly situation and act against the public interest.

The MMC reserves most of its venom for lager. It says that the high price
of lager is not justified by the cost of producing it. Lager sold for
approximately 10 pence a pint more than bitter but despite the claims of
the Brewers' Society that lager costs more to produce and advertise, the
real difference on a pint-to-pint basis was half a penny more in favour of
lager. It dismissed the Brewers' Society's claim that extra money was
needed to establish a 'new product' such as lager on the grounds that it had
enjoyed a significant market share for the last 25 years.

The MMC also recommends that tenants should be covered by the provisions of
the Landlord and Tenant Actd of 1954, which will give them greater security
of tenure.

While the Campaign will be overjoyed by the MMC's findings, which underscore
18 years of research and lobbying, there should be no room for complacency.
Local branches must ensure the recommendations are enforced. We do not
yet know how they will be policed and it is vital that the Big Six are not
let off the hook by divesting only low-barrelage pubs that other brewers
will not be keen to buy. As with the infamous pub swaps of the late 1970's,
we must insist that the major brewers do not get around the report by
cosy insider dealing between themselves.

The report is silent on the subject of take-overs and mergers but we can
draw comfort from the fact the the Elders bid for S&N has been blocked,
again to the benefit of the consumer, which signals a new toughness on
this situation by the Government.

CAMRA can take enormous pleasure from the vindication of our stance and
will take Lord Young's advice at his press conference when he suggested
breaking out the champagne. Naturally, we will celebrate with the grain
rather than the grape.

Surviving the American Dream
John R. Mellby Texas Instruments P.O.Box 660246, MS 3645
Dallas Texas, 75266
(214)517-5370 (214)343-7585
* "I am (not) recommending that you totally ignore your responsibilities as *
* a homeowner and just sit around all day with a beer can in your hand. *
* No indeed, I have long been a believer in purchasing bottled beer, and *
* pouring it into a chilled glass." *
* -- "Homes and Other Black Holes", Dave Barry *

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