UK Edition
Pub giant EI eyes High Court battle after industry regulator rules against it in tenant dispute
One of the UK’s largest pub companies is poised to launch a High Court challenge against the industry regulator, which could have major ramifications for thousands of tied tenants.
EI Group, previously known as Enterprise Inns, has moved to try to overturn a decision against it by the Pubs Code Adjudicator, which ruled that a contract it has offered one of its tenants does not comply with new regulations.
The company had more than 4,000 tied tenants at the end of September, according to its most recent results, showing the gravity of the case if it is accepted by the High Court.
The Pubs Code was launched in 2016 and aimed to break the centuries-old beer tie, which has forced tenants to purchase beer at inflated prices from companies such as EI in return for ostensibly lower rent. Under the legislation, which covers the UK’s six largest pub companies, tenants are now able to request contracts from pub-owning businesses that charge a market rent and give them freedom to buy beer from wherever they wish.
Under the new rules tenants that sign such “MRO” contracts are supposed to be no worse off. However, the Pubs Code Adjudicator has ruled that one of EI’s contracts does not meet the requirements and ordered it to make the terms more favourable to the tenant, which could encourage many more pubs to opt for an MRO.
EI has admitted that such agreements could hit profits by reducing its beer sales. It plans to ask the High Court to overrule the industry regulator.
A spokesman for EI Group said: “We have applied for permission to appeal against an award from the Pubs Code Adjudicator (PCA) and we are awaiting a decision from the High Court.
“We believe it is in the interests of all parties that there is certainty.”