Saturday, May 02, 2009

Leases: clause and effect

* By Tim Sykes
* 30/04/2009 15:52

This is from memory so apologies if I'm not 100% accurate but the principle of the tied tenant not being worse off than the free of tie goes back a long way. Sometime like 1988 the brewers and pubcos got block exemption from Article 85 of the Treaty of Rome on grounds that a million pubs would close in this sleepy land if the tie were to go as part of us becoming European... this exemption was supposed to be left in place for a decade to give the pub industry time to get its house in order before the exemption being lifted in 1998. Ten years to realign income stream and so on. That's why lots of leases were marketed in the early 1990's as coming free of tie in 1998 (as mine was):

* Article 85: outlawed deals between companies to fix prices, share out markets, limit production, technical development and investment, and other restrictive practices. The Commission has banned the following types of agreements:

o Market-sharing agreements.

o Price-fixing agreements.

o Exclusive purchase agreements.

o Agreements on industrial & commercial property rights.

o Exclusive or selective distribution agreements.

* Article 86: banned "abuses of dominant position" by firms or groups of firms.

Articles 85 and 86 have been renumbered as Articles 81 and 82 of the Treaty on the EC (TEC).

Simple reality is this industry has sidestepped all restrictive legislation and recommendations from all sides and pubcos concentrated all the power of the industry in their own hands and here we are. An industry knackered and broken.

edited by: J Mark Dodds at: 02/05/2009 19:42:08

This post replies to martin kay > RE: Leases: clause and effect

Tim Sykes ought to be able to acknowledge that most companies; most businesses, collect and pay huge amounts of tax (unless they are very clever at tax avoidance) because tax is what allows us to live in a society that provides education, infrastructure, roads, transport, healthcare and a few other benefits to all. The duty on alcohol is part of that and we have to be able to accommodate that tax within our retail pricing structure or else suffer falling demand due to our prices being too high. When this construct applies to tied pubs the burden of wholesale prices which are massively inflated due to the needs and greeds of freeholders' economic demands means tied margins do not provide a viable surplus for the retailer while returning a handsome easy income stream for the freeholder.

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