Pub regulator hits Edinburgh-based Star Pubs & Bars with £2 million fine: Star may appeal

Edinburgh-headquartered Star Pubs & Bars, the Heineken-owned group with more than 200 pubs in Scotland, has been hit with a £2 million fine by the Pubs Code Adjudicator after investigators found serious and repeated breaches of the code over three years.

Thursday, 15th October 2020, 10:53 am
Star Pubs & Bars forms part of brewing giant Heineken. Picture: Ian Georgeson
Star Pubs & Bars forms part of brewing giant Heineken. Picture: Ian Georgeson

The regulator found that where a pub tenant had asked to no longer be tied to Heineken, they were still made to sell “unreasonable levels” of the company’s beers and ciders.

At one point 96 tenants who requested a free-of-tie option were told that 100 per cent of the keg beer they sold had to be Heineken brands, the report added.

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It was also found that Star, which has thousands of pubs and bars across the UK, insisted that its own code compliance officer must “ensure the code is interpreted to the commercial benefit of Heineken UK”.

A total of 12 breaches were identified and adjudicator Fiona Dickie warned that other brewers could face similar actions.

She said: “The report of my investigation is a game-changer. It demonstrates that the regulator can and will act robustly to protect the rights that Parliament has given to tied tenants.

“I will be holding discussions with all the companies I regulate following my findings about how they will ensure they are code-compliant.

“My message is that if anyone previously had any doubts about my resolution to act when I find breaches, they can have no doubt now.”

She said Star pubs were forced to keep selling Heineken brands, which include Birra Moretti and Symonds cider, despite repeated regulatory interventions and clear arbitration rulings from the PCA.

The probe, which is the first ever for the PCA, covers the period between 21 July 2016, when the pubs code became law, and 10 July 2019.

Under a “tied” lease, pub tenants must buy a certain amount of beer from their landlords, but they can ask to break free of the tie using a “market rent only” option.

This arrangement means they may still be required to stock the brewer’s beer – but strict limits have been set on how much they are obliged to buy since the pubs code came into effect. This is where the PCA found the breaches.

In the report the PCA described Star as a repeat offender and said the company had been given opportunities to set itself on the right path “but intentionally or negligently failed to do so”.

It said Star “failed to heed statutory advice, the PCA’s regulatory engagement and learnings from arbitration awards. It did not engage frankly and transparently with its tenants or meet the standards required of a regulated business when engaging with the PCA.

Star Pubs & Bars has some 240 tied, leased and tenanted pubs in Scotland.

The arbitration rulings by the PCA saw Star switch to a tiered approach but those pubs that needed little or no Heineken products faced having to stock 60 per cent Heineken keg products within one year.

Lawson Mountstevens, managing director, Star Pubs & Bars, said: “We are deeply disappointed and frustrated at the outcome of this investigation.

“There are many aspects of the report that we fundamentally disagree with and we are actively considering an appeal.”

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