Public House and Market Definition Essay

Submitted By Lewis-Loso
Words: 2276
Pages: 10
Open Document
An examination of the 2009 Camra vs Oft case with critical analysis of the market definition

Word count: 2122

Introduction

Until 1989 many pubs were owned by breweries, but leased to tenants who were ‘tied’ to selling the breweries’ products. This system was broken up because of concerns that the vertical relations leading to brewery dominance was anti-competitive.

The legislation that brought this about is known as the ‘Beer Orders’. This consequently meant that large breweries were restricted to ownership of 2,000 tied pubs and now required to allow tenants to source a guest ale externally. A new business model then emerged known as the ‘pubco’ model whereby a company controls a series of pubs, either managed by itself or leased to tenants.

Many, although not all, pubco pubs are tied. Those tied are obliged to buy products, usually beer, supplied by the pubco itself (some pubcos are also breweries and include their own products as part of the tie). Like the brewery pub ownership model, the pubco model and the pubco tie have generated a great deal of criticism.

In particular, there have been concerns that pubcos are distorting the market, and that the beer tie constituted unfair competition similar to those prior to the beer orders. Following these concerns (an independent body) proposed a super–complaint to the OFT.

Intervention or investigation?

It has been noted that interventions can have unexpected consequences. Displacing pubcos without considering the market as a whole may put too much power into the hands of brewers and wholesalers (House of Commons, 2009).

For these reasons Camra called for an urgent investigation rather than promoting intervention with a policy recommendation.

Summary of the case brought by Camra

Camra submitted a super-complaint to the OFT in July 2009. Camra's allegations included that:

Supply ties were protecting pub-owning companies from competition, so that they are able to inflate the prices and rents to tied pubs, leading to higher prices for consumers (Camra, 2009).

The existence of supply ties was leading to the foreclosure of suppliers who are unable to access tied pubs directly (Camra, 2009).

In its super-complaint, Camra stated that the OFT should carry out a market study into the pub sector.

Summary of the response by the OFT

The OFT responded to Camra's super-complaint in October 2009. The OFT's response stated that it had found no evidence that beer supply ties were resulting in competition problems that were having an adverse impact on consumers, and that it would therefore be taking no further action (Office of Fair Trading, 2009).

The market definition

The market definition proposed by Camra was limited to: Bars, Taverns, Cocktail lounges, Discotheques licences to sell alcohol (with beverage serving predominant) and Beer parlours.

The key statement from Camra is that the public house market is separate from other licenced on-trade premises. The market definition was however was never defined by the Oft, which resulted in heavy criticism of their overall response. For this reason this report will focus specifically on the argument of the market definition.

The main players in the market

The pub market is split into three distinct categories being: leased pubs, brewer-owned pubs and managed pub operators.

The largest leased pub estates in the UK are owned by Enterprise Inns plc ('Enterprise Inns') and Punch Taverns plc ('Punch Taverns') (both non-brewing pub companies), each owning over 7,500 pubs, or 14-15 per cent of the total number of pubs in the UK in 2009 (Office of Fair Trading, 2009).

The largest brewer-owned leased pub estates are operated by Marston's Pub Company plc ('Marston's'), Greene King plc ('Greene King') Scottish & Newcastle UK Limited (S&N UK Limited), which each own around 4-5 per cent of pubs in the UK in 2009 (Office of Fair Trading, 2009).

The largest managed pub operator is Mitchells and Butler’s plc which owns approximately
Show More

Related Documents: Public House and Market Definition Essay

Eminent Domain: Public Use Or Abuse?

Eminent Domain: Public Use or Abuse? The urban economy has become increasingly competitive. As a result, economic development projects have made priority on the agenda in many cities. Because today’s top issue in cities is jobs, politicians are using eminent domain powers to create jobs and businesses. Hulen describes eminent domain as the seizing of private property by the government without the consent of the owner. National and local governments are using the power of eminent domain to create…

Words 1318 - Pages 6

Regulation of Financial Accounting and Reporting: the Pro-Regulation Perspective Essay

Regulation is defined as a set of rules that is designed to control and govern conduct by authority (Deegan 2009, p.59). On the basis of this definition, Deegan (2009, p.59) has defined regulations relating to financial accounting as rules that are developed by independent authoritative body to govern the preparation of financial statements which are accounting standards. Since decades ago, there have been arguments for and against the existence of accounting regulations. With a stance of pro-regulation…

Words 1257 - Pages 6

Essay MKT/561

Alicea June 4, 2013 Financing decisions determine how a firm will raise capital. Examples of financing decisions include securing a bank loan or selling debt in the public capital markets. Capital budgeting involves deciding which productive assets the firm invests in, such as buying a new plant or investing in the renovation of an existing facility. Financial managers should select a capital project only if the…

Words 1493 - Pages 6

Women In Ancient Greece

where philosophy played a fundamental part in the definition of the most important aspects of the State, the men were seen as a capable of building political ideas. Although, at this confluence of knowledge given to men by the exercise of philosophy and politics, women were not taken into account due their consideration as inferiority. The same occurred in Rome history. Men decided the fundamental aspects of the Republic, and women were not public figures.They were the wives of emperors, monarchs…

Words 495 - Pages 2

Paper planes

that share some common features. By contrast, microeconomics treats economic processes that concern individuals. Example: The decision of a firm to purchase a new office chair from com- pany X is not a macroeconomic problem. The reaction of Austrian house- holds to an increased rate of capital taxation is a macroeconomic problem. Why macroeconomics and not only microeconomics? The whole is more complex than the sum of independent parts. It is not possible to de- scribe an economy by forming models…

Words 854 - Pages 4

Difference Between Private Sector And Corporate Governance

a) Compare and contrast the key differences between public and private sector organizations that may impact on the application of corporate governance principles. Today the importance of corporate governance is widely accepted throughout the world. This may be due to excesses number of corporate scandals, high global competition, integrated financial markets, and importance stakeholders dialogue in running the organizations. Corporate governance means accepted business practices, laws, and regulations…

Words 1881 - Pages 8

This that bullspit Essay example

traditional concern of economics. An approach to understanding the processes of production, distribution, and consumption, through the study of agent behavior under scarcity, may go as follows: The continuous interplay done by economic actors in all markets sets the prices for all goods and services which, in turn, make the rational managing of scarce resources possible. At the same time, the decisions made by the same actors, while they are pursuing their own interest, determine the level of output…

Words 4082 - Pages 17

Types Of Financial Markets

Financial Markets- create products that provider return for those who have excess funds and making funds available to those who need money. Intermediaries are firms who do that stuff. Also factor markets for capital (savings can be used for future consumption, invest in capital, increase in productive capacity) Sources of savings 1. Saved household income 2. Not distributing part of profit to owners 3. Gov budgets for surplus 4. O/S borrowing and access to foreign savings Reasons for Borrowing…

Words 1120 - Pages 5

Essay on Marketing Management

wherever a market exists. At the beginning, there were only a handful of basic ways of marketing. As time goes by, it transforms into various kinds of methods in present, the organizations or individuals get much more choices to make the decisions which one is suitable for them. Since the computer has been invented, the expression of marketing becomes more interesting and active in most ways; some of marketing programs are more functional. However, in order to survive in today’s market, all the marketers…

Words 2524 - Pages 11

Essay about Spanish Financial Crisis

Spanish financial crisis Introduction (source: Wikipedia) The 2008–2010 Spanish financial crisis is part of the world economic crisis of 2008. In Spain, the crisis was generated by long term loans (commonly issued for 40 years), the building market crash which included the bankruptcy of major companies, and a particularly severe increase in unemployment, which rose to 13.9% in February 2009. Spain continued the path of economic growth when the ruling party changed in 2004, keeping robust GDP…

Words 1064 - Pages 5