Analysts played down the importance of the Commons Trade and Industry Select Committee’s an inquiry into the tenanted pub sector. Williams de Broe described it as a “storm in a beer glass”.
Analysts believe it is unlikely to come to different conclusions than the many, largely inconsequential reviews that had come before it.
But committee chairman Martin O’Neill suggested the inquiry could in turn create a case for a formal Office of Far Trading investigation into allegations that some groups have abused tied landlords by exploiting a dominant company position in the marketplace.
Enterprise Inns felt the impact and closed down 16p on Friday to 578p, although at one point during the day they had fallen as low as 557p. Merrill Lynch repeated its “buy” advice on the stock and 710p target. Speculation that Enterprise might have to sell more pubs to meet regulatory requirements for its merger with the Unique Pub Company also depressed the shares.
Punch Taverns reacted badly, down 42p on the week to 503p, one of the week’s biggest fallers. Wolverhampton & Dudley Breweries, another tenanted pub owner, fell more than 2%.
The investigation follows lobbying by the Federation of Small Businesses, which has been acting for unhappy publicans.
The committee will look at exclusive beer supply deals, the link between beer pries and rents, the profits pub companies make on wholesaling beer, the difference between the pub companies’ wholesale prices and the free-market price and the way rents are set.
The Times 08/05/04 page 52 (Larger Capitalisation Shares), page 55 (Need to Know), page 56
Financial Times (Money & Business) 08/05/04 page 1, page 21 (Stars & Dogs)
The Daily Telegraph 08/05/04 page 29
