The brewer was found in breach of the Pubs Code for forcing its Star Pubs & Bars venues to stock too many of its beers
Heineken has 2,500 UK pubs under its Star Pubs & Bars pubco arm, 1,900 of which are subject to the Pubs Code.
The Pubs Code Adjudicator (PCA) Fiona Dickie said that the company had 'seriously and repeatedly' broke rules for three years and found several pub landlords who had asked to no longer be tied to Heineken were told that all the keg beer they sold had to be Heineken brands.
Dickie called the fine a, ‘game changer that demonstrates that the regulator can and will act robustly to protect the rights that parliament has given to tied tenants’ but Heineken says the fine is unwarranted and is considering an appeal.
‘We are a responsible business that takes its regulatory obligations extremely seriously and strives to achieve the highest levels of professionalism,’ said Star Pubs & Bars MD, Lawson Mountstevens.
What is the Pubs Code?
The Pubs Code legislation was introduced in July 2016 to regulate the relationship between the six largest leased and tenanted pub-owning businesses, who all own more than 500 pubs, and their licensees and tenants.
‘From the outset we have been transparent and repeatedly sought guidance from the regulator on the terms we were offering those licensees looking to take up the Market Rent Only (MRO) option, but the PCA consistently declined to respond to those requests. Instead it chose to launch a long, costly and unnecessary investigation.’
The PCA investigation covers the period from 21 July 2016, when the Pubs Code came into effect, until 10 July 2019.
During this period, Dickie said she found 96 pub tenants who asked to sell competing brands were told that 100% of the keg beer they sold had to be Heineken brands.
The Pub Code legislation allows pub licensees and tenants to request a Market Rent Only (MRO) option to go free of tie and pay only a market. This same legislation gives pubcos the right to require licensees to stock their brands – a ‘stocking requirement’.
Heineken says that while it is clear that when a pub goes MRO, brewers have a right to restrict (rather than prevent) competitor products in their pubs, the Code gives no detail on what the legislation does or does not permit, or what might be compliant or not.