The Office of Fair Trading (OFT) has decided to take no action in response to the Campaign for Real Ale's (CAMRA) super-complaint relating to the supply of beer in pubs.

CAMRA had raised concerns about the operation of exclusive purchasing obligations by pub-owning companies, which require lessees to purchase beer solely through their pub-owning company landlord. It believes that these so-called 'supply ties' protect pub-owning companies from competition, and lead to higher beer prices and less choice for consumers. The complaint followed a report from the parliamentary Business and Enterprise Select Committee (BEC) which called for urgent action to re-balance the relationship between pub-owning companies and their lessees in the interest of consumers. CAMRA also raised other issues including the methods used by pub-owning companies for calculating rents.

In its adjudication, the OFT said: "Having examined the issues raised in the super-complaint, [we have found no] evidence that supply ties are resulting in competition problems that are having an adverse impact on consumers. There is generally effective competition between pubs and [we do not] consider that supply ties contribute to higher prices or prevent pubs offering a wide choice to consumers. "The OFT has received submissions from pub lessees outlining their concerns about the rent assessment process and their negotiations with pub landlords. Although the OFT acknowledges the concerns of these lessees, the objective of the OFT's work is to ensure that effective competition delivers value and choice to consumers.

"The OFT considers that the issues raised in the super-complaint do not warrant further assessment by the OFT, and will be taking no further action." Responding to the ruling, CAMRA has now called for the beer tie arrangement to be urgently referred to the Competition Commission. Mike Benner, the organisation's chief executive, said: "We do not accept that there is sufficient competition between pubs or adequate consumer benefit from competition and choice within this sector. The OFT decision fails to address the legitimate concerns raised both in our super-complaint and the BEC report and does nothing to address the imbalance in the landlord/ lessee partnership which is leading to higher prices, less choice and weak investment in pubs.

He added: "It is difficult to see how the OFT can argue that competition is working well in the pubs sector when demand is falling, yet prices are rising. Urgent action is now required by government to stem the flow of pub closures, build a sustainable future and ensure that consumers get a fair share of the benefit from tied agreements as demanded by competition law." Mike Coughtrey, KPMG partner covering the pub sector, believes that the tie itself is not the key issue, saying "the tied structure is the cornerstone of the pub industry, providing a low cost entry point for those starting out in it.

"The issue, particularly in the current economic climate, is that in some cases the combined rent – made up of the standard dry rent, the landlords margin on the tied beer and machine profits – is not always being set at sustainable levels, making it increasingly difficult for the tenant to trade profitably and sustainably."