Friday, March 13, 2009

Spot on Ex Sapper. OFT has always looked at the monopoly issue through a filter that ignores the relationship between individual pubco and tenant and instead considers the spread of pubcos in the market.

I'm no expert but it's something like this: If one property company, say RedNose Taverns, owned more than 60% of the pubs in a geographic region that would be considered a local monopoly and some of the pubs would have to be sold off, say to HairyEgg Inns, so there would be more competition in the area. This COULD leave the odd village with all its pubs owned by one PunCo though. You know, it's the sort of thing that happens when a supermarket buys out a rival chain - slows down the sale and breaks up the portfolio a bit.

The fact, as you say Ex, that any one property company who owns tied pubs sets a rental, wholesale supply price and product list that is pretty much identical to all the other PunCos is not even touched on. etc.

This situation does, and this is wild speculation of course, lead to relaxed romantic dinners in candle lit rooms behind closed doors with low music playing where a couple of senior board members of PunCos divvy up their estates, share out the units on the chequers board so there's no overall competition issue, discuss how to set freehold values, product ranges, manipulate the barrel price, coordinate the market, what to brief BBPA on and how to inform RICS of their duties for the next five years or so and the length of their yachts moored in the Med.

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