Last November, Britain's largest pub companies were dealt a serious blow after MPs rebelled against the government and voted to add a Market Rent Option (MRO)* to the Small Business, Enterprise and Employment bill. Companies such as Enterprise Inns (ETI) and debt-laden Punch Taverns (PUB) recorded double-digit share price falls, while recent acquisition-target (and Punch Taverns spin-out) Spirit Pub Co (SPRT) was down 6.5 per cent on the day.
Voting through the MRO would remove the 'beer tie' that critics claim is essentially uncompetitive and works unfairly in favour of parent pub chains. Under existing laws, tenants are obliged to purchase supplies exclusively from the pub owner. Removing the 'tie' would allow pub landlords to purchase goods from wherever they choose, thereby driving up competition in the market by removing the effective monopoly held by listed pub companies.