Pub giant EI Group prepares for High Court appeal

EI Group, formerly known as Enterprise Inns, has applied for permission to appeal against a decision by the Pubs Code Adjudicator which ruled that its tied tenant contracts do not comply with its new regulations.

Launched in 2016, the Pubs Code had the goal of breaking the historic beer tie which forced landlords to buy beer at higher prices from pub-owning businesses in order to gain a lower rent. The new legislation allows tenants to request contracts, called market rent only (MRO) contracts, which give them complete beer buying freedom while paying rent at the market rate.

The Pubs Code Adjudicator has ruled that the terms of EI Group’s MRO contracts do not comply with the new regulations and should be more favourable for the tenant.

A spokesman for the EI Group told The Telegraph that: “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”.

It plans to ask the High Court to overrule the decision made by the Pubs Code Adjudicator, which could have serious implications for its portfolio of pubs.

As of November 2017, EI had 4,051 tenanted pubs. Simon Townsend, chief executive at EI Group, told The Telegraph at the end of last year that fewer tenants had opted for MRO contracts than had been expected.

GMB Southern, the union for tied pub tenants, announced today that it is is calling on MPs to attend the debate in the House of Commons on Wednesday 24 January regarding “the failure of the Pub Code” to address the “continued exploitation” of tied pub tenants.

Paul Maloney, GMB Regional Secretary for Southern Region, said: “The 2015 election of a Tory Government led to the British Beer and Pub Association watering down the Code. The Code that came into force in July 2016 had 900 changes in wording from the earlier draft.

“These changes either wrecked or unduly complicated the implementation of the original aims of the code.This is a morality tale of the powerful brewers and property interests using its power and money to secure small print changes in the Code to frustrate what persistent GMB campaigning achieved in Parliament in 2014.

“GMB tenant representatives report that as a consequence the abuse of the tied tenant is worse now than at any time in the years GMB since sought a fair deal for tenants and pub users. This is a scandalous and not acceptable”.