Regulator fines Heineken £2m for breaching Pubs Code

Stars forced tenants to sell 'unreasonable levels' of Heineken after they had asked to no longer be tied to the brand, watchdog finds

Pub bosses plan to appeal a landmark decision to fine Heineken £2m for "serious and repeated breaches" of the industry's code over a three-year period. 

The Pubs Code Adjudicator found Heineken's Star Pubs & Bars had forced tenants to sell "unreasonable levels" of Heineken products after they had asked to be no longer tied to the brand, and despite repeated interventions by regulators.

It is the first intervention by the Government's PCA since it was formed in 2016.

Under a "tied" lease, pub tenants must buy a certain amount of alcohol products from their landlords, but they can ask to break free of the agreement using a "market rent only" option.

Lawson Mountstevens, Star managing director, said: "We fundamentally disagree with and we are actively considering an appeal."

The report said that up to August 2018, 96 tenants who requested a free-of-tie option were told that 100pc of the keg beer they sold had to be Heineken brands.

It also found that Star demanded that its own code compliance officer must "ensure the code is interpreted to the commercial benefit of Heineken UK".

The report said that this breached the requirement to appoint a compliance officer "whose role is to verify compliance".

A total of 12 breaches were identified and regulator Fiona Dickie warned that other companies could face similar actions.

Ms Dickie said: "The report of my investigation is a game changer. It demonstrates that the regulator can and will act robustly to protect the rights that Parliament has given to tied tenants.

"I will be holding discussions with all the companies I regulate following my findings about how they will ensure they are code compliant.

"My message is that if anyone previously had any doubts about my resolution to act when I find breaches, they can have no doubt now."

Star denied any wrongdoing and said it would challenge the fine in the High Court.

Mr Mountstevens said Star had "repeatedly sought guidance from the regulator on the terms we were offering those licensees". "The PCA consistently declined to respond to those requests. Instead it chose to launch a long, costly and unnecessary investigation."

Emma McClarkin, head of the British Beer & Pub Association, echoed some of Mr Mountsevens' concerns.

"There are issues and inconsistencies in the way the statutory framework is applied, including a lack of adequate guidance," she said.

However, Greg Mulholland, chairman of the British Pub Confederation, welcomed the decision.

He said:  "The new Pubs Code Adjudicator has now formally found what we have been telling her predecessor and office since the Pubs Code began."

Gary Murphy from the Campaign for Pubs said the ruling "is only the tip of the iceberg".