Pubs Code Adjudicator Fiona Dickie has fined Star Pubs and Bars £2 million after finding the company seriously and repeatedly breached the legally binding Pubs Code over nearly three years.
Oct 14, UK: After completing her first investigation under the Pubs Code Ms Dickie said the nature and seriousness of the breaches by Star (part of the Heineken Group) that she had uncovered merited a financial penalty. The fine would act as a deterrent to Star and other pub-owning businesses she regulates from future non-compliance.
Ms Dickie 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.
Star – which operates the pub estate business of Heineken in the UK - had persisted in forcing its tenants to sell unreasonable levels of Heineken beers and ciders when they requested to go free of tie. This was despite repeated regulatory interventions and clear arbitration rulings from the PCA.
The PCA found the company had committed a total of 12 breaches with the result that it had frustrated the principles of the Pubs Code. As well as identifying how the company had offered stocking terms that had acted as a deterrent to tenants pursuing a free-of-tie tenancy, the PCA highlighted systemic corporate failures by Star in its approach to compliance.
Specifically, during the investigation, she found that the company had included a responsibility in the job description of the company’s Code Compliance Officer ‘to ensure the Code is interpreted to the commercial benefit of Heineken UK’. This breached the Code requirement to appoint a compliance officer whose role is to verify compliance.
In the report of the investigation, the PCA described Star as a repeat offender and said the company had been given opportunities to set itself on a compliant path “but intentionally or negligently failed to do so”.
It 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.
Where it did change its approach, the efforts it made to comply were for the most part inadequate and not credible.