Brewers Overcharge

In a new report, the United Kingdom's big breweries are accused of unfairly pegging prices and using unfair tactics to drive competitors out of the market.

These breweries stand accused of consistently increasing the price of a pint at a rate above inflation. The Office of Fair Trading (OFT) has set up an investigation whilst consumer groups have called for legal action to ensure that there is greater choice and cheaper prices.

Considering the line taken by the industry's budget submission, which set out to blame higher taxation for a wide range of problems, the OFT's exposure of the brewers' hypocrisy might cause even this sympathetic government to take any future statements on their part with a pinch of salt: "The producers, importers and retailers of alcoholic drinks in the UK join in condemning the consequences for the UK jobs and international competitiveness from past government policy of high taxation of alcoholic drinks. Higher taxation depresses home sales, encourages cross-border shopping to the detriment of the UK revenue and the domestic industry, encourages fraud and other crime and sends the wrong signals to our export markets. Duties on alcoholic drinks in the UK are too high and should be reduced." The submission to the Chancellor was made by the Brewers and Licensed Retailers Association, the Scotch Whisky Association, The national Alcohol Producers Association, and other pillars of the drink trade.

British brewers are not alone when it comes to dirty tricks and an exploitative attitude to the customer. Some of the most powerful brewers on the continent, including Carlsberg and Heineken, are suspected of illegal market-sharing agreements among themselves. Investigators from the European Commission have raided offices in Denmark, Holland and Belgium, but the companies continue to proclaim their innocence.

Bass, Scottish & Newcastle, Whitbread, and Carlsberg-Tetley between them account for more than 80 per cent of the beer production in the United Kingdom and critics accuse these companies of keeping prices unnecessarily high. A report published by Credit Suisse First Boston confirms that beer prices in the UK have risen faster than anywhere else in Europe, other than in the Republic of Ireland.

The average price of a pint of lager has increased from 92p in 1987 to £1.93 in 1999. Figures show that, had taxation and inflation alone been taken into account, the price would today only be £1.77. The Office of Fair Trading is expected to produce a report in August. "The fact that prices have not come down is clear evidence of abuse of the consumer," said a spokesman for the Consumers' Association. "We welcome the OFT's investigation and hope it will be referred to the Competition Commission so the market can be properly regulated."

It is not only the customer and the groups which speak on his behalf who resents the behaviour of the big brewers. Independent public houses and smaller breweries say that the leading producers in the UK should also be investigated for taking unfair advantage of their control of the marketplace. They claim that the breweries peg the price of a pint in areas they control, dump vast quantities of cut-price beer to drive out competitors, and sell off public houses which have a legal right to sell guest ales.

"The market is anti-competitive," said Peter Haydon, general secretary of the Society of Independent Brewers. "The big breweries will sell beer at high prices where they manage the pubs, but when there is the threat of genuine competition they will offer massive discounts that the smaller breweries can't compete with."

In 1987 the Monopolies and Mergers Commission insisted that more than 10,000 pubs owned by the breweries should offer "guest" beers to ensure competition. The big brewers' attitude was exemplified by Bass who promptly sold off most of the pubs involved.

Bev Robbins, a landlord and owner of the Kemptown Brewery in Brighton, said, "I used to sell my beer directly to a dozen pubs. Not one pub buys from me now on a regular basis. They have all been sold off to companies which don't take guest beers. Everywhere you go now it's the same beers - Carling, Carlsberg, John Smith and Bass."

The breweries deny any unfair practices. "Consumer choice drives the market," said a Bass. "This is a free and competitive industry." As the lady said, "He would say that, wouldn't he?"