Licensed Trade: Competition (Hansard, 26 January 1993)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield)
My Lords, it is far too soon to make a considered assessment of the impact of the beer orders on competition in the beer market. The main requirement of the orders—namely, that the national brewers should free pubs from ties—has only just come fully into force. The overriding need now is for a period of stability in which brewers can get on with running their businesses and licensees their pubs.

§ Lord Cocks of Hartcliffe
My Lords, I thank the noble Baroness for that reply. While it may be early days, may I ask whether she is able to give the House 1134 an assurance that this upheaval has led to more competition and greater freedom of choice to consumers?

§ Baroness Denton of Wakefield
My Lords, I am pleased to be able to reassure the noble Lord that although it is indeed too soon to assess the full effects of the order on competition in the beer market, that market has already become more competitive in certain significant respects. There has been a marked reduction in the proportion of beers sold through brewers' tied estates, the enforced divestment of pubs has led to the emergence of independent pub chains and the wholesale price of beer has fallen.

§ Lord Mason of Barnsley
My Lords, is the Minister aware that after the report of the Monopolies and Mergers Commission and since its recommendations on beer supplies have been carried out, there has been a state of turbulence in the industry? Is she aware that many licensees have suffered under new contracts and public house closures and there seems to be no established procedure for appeal? Alongside that, is the noble Baroness aware that there are constant complaints from consumers of short measures and high prices on wines and beers? Is there not now a case for an ombudsman in the trade?

§ Baroness Denton of Wakefield
My Lords, I shall try to cover all the noble Lord's questions. I agree wholeheartedly with him that there has been turbulence. That is why we believe that there is a need for stability, for people to focus on their businesses. We understand from the tenants' organisations that rents being sought by the brewers have been more modest in the past 12 months. As a result of pressure put on the brewers by the Government, arbitration is available if it is not possible to reach agreement on the rent. I also remind the noble Lord that, of course, the Director General of Fair Trading can examine such matters.

§ Lord Ross of Newport
My Lords, is it not regrettable that it appears that since the Monopolies and Mergers Commission intervened, umpteen pubs, particularly in the rural areas, have either closed or are up for sale? The price of beer has increased from about 90 pence in the rural areas to £1.50 or £1.80 a pint. That does not seem to be a satisfactory situation.

§ Baroness Denton of Wakefield
My Lords, it has been difficult in recent years to look at the closures of public houses in small communities and see whether they were due to the recession or the effect of the beer orders. Certainly the availability of more public houses to independent brewers has brought a difference.
On the price of beer, the wholesale price has been reduced. Retail prices are a matter for market competition. If we were to relocate the House of Lords to the north of England, prices would be better.

§ Lord Dean of Beswick
My Lords, is the Minister aware that despite her answer to the noble Lord, Lord Mason, tens of thousands of licensees and their wives have lost their living in the past three years because of the appalling increase in rates and charges levied on 1135 them by the brewers, after greater profits? What can be done to give redress to these people? Tens of thousands of tenants and their wives have lost their living due to the action of the brewers and no one else.

§ Baroness Denton of Wakefield
My Lords, I must query the noble Lord's figures. I have no figures at the moment but I understand the arguments which he puts. I point out that the Government have brought considerable pressure to bear on the brewers to bring in the arbitration system which I understand is already working well with one large company.

§ Lord Boardman
My Lords, does my noble friend agree that the initial impact of the implementation of the report has not been a happy experience for those anywhere in the trade—the wholesalers, retailers and perhaps, above all, the customers who at retail level have suffered substantially increased prices?

§ Baroness Denton of Wakefield
My Lords, I agree with my noble friend that there has been much change in the area. However, there has also been change to the benefit of customers with greater choice in some cases and also investment in the industry.

§ Lord Peston
My Lords, is the noble Baroness aware that if their Lordships were relocated to the north of England, so long as I am chairman of the Refreshment Committee, prices would certainly not decrease?
Reverting to the Question on the Order Paper, does the noble Baroness remember that all this derives from a Monopolies Commission report, accepted by the Government, which said that the brewing industry engaged in cartel activity and anti-competitive practices? Does she recall that it was her noble friend Lord Young of Graffham who, with not a lot of support from his own noble friends but strong support from me, introduced the orders so as to achieve a change? There was then a commitment to a review in 1993 of what was happening. Can the noble Baroness tell your Lordships what has happened that now causes the Government not to have the review? It seemed to me at the time that there was a definite commitment to a review to see whether competition had improved, in the hope that the consumer would be better served. Why is that not happening? What has changed?

§ Baroness Denton of Wakefield
My Lords, I thank the noble Lord for his commitment to market forces. Concerning the commitment to a review, the Director General of Fair Trading will keep the beer orders under review, to ensure that the national brewers comply fully with the requirements. He will also continue to monitor the market generally and will investigate any evidence of anti-competitive behaviour by the brewers.
However, we have decided that a full review of the effects of the orders could not be justified, given the need, which noble Lords on both sides of the House have identified, for a period of stability.

§ Lord Harmar-Nicholls
My Lords, is my noble friend aware that while we congratulate her upon the 1136 skill of her answers, this is a theory from the Monopolies Commission which in practice has not come off? Something ought to be done about it, like looking at it again.

§ Baroness Denton of Wakefield
My Lords, I am afraid I must disagree with my noble friend. As I said in my Answer to the noble Lord, Lord Cocks, there has been evidence that competition is beginning to work in this market.