Reducing the Strength: MPs vow to keep cranking up the pressure on competition watchdog to act

22 January, 2016

Griffiths: this concerns many MPs

MPs have warned the competition watchdog they will not stop pounding on its door over Reducing the Strength schemes after it suggested they are not an urgent enough priority to act upon.

Local councils have been accused of encouraging retailers to break competition law by sharing commercially sensitive information when promoting the schemes, which seek to prohibit the sale of beer and cider above a certain abv.

MPs and peers from across various political parties have joined Off Licence News and a host of trade bodies in calling on the Competition and Markets Authority to clamp down on these councils.

But the CMA has continually wriggled out of pursuing illegality, preferring instead to offer guidance to councils and then wash its hands of the matter.

Around a dozen MPs and peers from the All-Party Parliamentary Beer Group held a hearing at the House of Commons this week, and they grilled the CMA on what it is doing about the schemes.

John Kirkpatrick, senior director at the CMA, fielded their questions and admitted that some of the evidence they have heard might suggest that council officers are encouraging retailers to break the law by persuading them to agree in cohort to stop selling certain products – something that violates competition laws – although he added that competition law is often very murky and complicated.

This evidence includes the case of Hounslow council in London, which brought 15 retailers together in the same room and convinced them all to agree not to sell beer and cider above 6% abv. In true smoking gun fashion, the press release documenting this meeting is still on the council’s website.

Various other examples abound, such as in Essex, where Southend council announced that two specific stores were no longer selling “cheap, strong drink” and encouraged others to join, and in Middlesbrough, where council officers have used similar tactics in holding up a specific store as a shining light in a bid to convince others to join.

But Kirkpatrick said the CMA has limited resources and feels that after taking a long hard look at this issue, the best approach is to offer guidance rather than intervening. 

Kirkpatrick said: “So far we feel that our approach of guidance is a better and more proportionate way to tackle the challenge [of Reducing the Strength schemes potentially leading to competition law breaches] as we see it.”

The CMA has issued guidance to retailers and to local councils on how to avoid breaking competition law when these schemes are being created and feels that is enough of a response, despite a clamour among the industry and MPs for it to pursue illegality, such as that presented in the Hounslow case.

Andrew Griffiths, MP for Burton and Uttoxeter, and chairman of the All-Party Parliamentary Beer Group, told Kirkpatrick: “We hope the large number of cross party members attending gave you got a flavour of the importance of this area – it’s an issue of great importance not just to the drinks industry but to retailers as well, particularly small retailers who feel intimidated and that their legal right to sell certain products is being impinged by their local authority.

“We do hear what you say about resources and proportionality of your response, but hope that given the strength of feeling shown you’ll understand that we will probably return to this again and will keep a watching brief. And the industry will have heard what you said and may well think about bringing complaints to your attention."  

OLN presented information about cases such as Hounslow – where it sounds like competition law is being broken – at the House of Commons hearing. Paul Bartlett, corporate affairs director at Magners and K Cider supplier C&C, spoke about the damaging effect these schemes are having on the drinks trade, adding that they are distracting everyone from dedicating themselves to schemes like Community Alcohol Partnerships that are much more likely to solve problems like street drinking and antisocial behaviour.

Stephen Benton, northern Europe agent for Trappist ale Chimay, spoke about the lunacy of council officers outlawing a craft Belgian beer that sells for £7 a bottle, is produced by monks and gives the majority of its profits to charity when they are trying to stop street drinking and antisocial behaviour. He said people drink beers like Chimay with cheese in Michelin starred restaurants, not on park benches, yet still his beer has been stripped from shelves in various pockets of the UK under the guise of Reducing the Strength schemes.

Cllr Tony Page, licensing spokesman for the Local Government Association, took to the stand and claimed that “premium” and “craft” products were exempt from the schemes. But a quick Google search from one MP showed that craft beers were part of a blanket scheme in the borough of Westminster, where the hearing was taking place. Page was then told that Benton would not have travelled over from Belgium to attend the hearing if his beer was not being banned across the UK.

Page also claimed that the schemes were grounded in evidence, but was berated by MPs for suggesting that street drinkers only drink cider and beer and not whisky and vodka, which are often cheaper per unit and do not feature in the schemes.

Competition lawyer Martin Rees, who attended the hearing, said the CMA could solve the problem quickly by writing to councils like Hounslow and asking them to put a stop to the schemes.

He said: “I fully accept what is being said about prioritisation [the CMA devoting resources to cases where there are more complaints]. The last thing we need to happen is for independent retailers to be dragged into an investigation and fined. That would be a wrong result.

“It is difficult for the CMA without an investigation to determine what has actually happened. There has to be some degree of investigation.

“When discussing it with the European Commission, we referred to the Hounslow case, where it was absolutely clear that competition law was breached. There is really no question about it.

“If that is not a cartel [what is?] – there is no doubt about that case, it is fully documented by the council itself.

“I am not saying you [the CMA] should go out and accuse retailers of infringement. Instead you should write to the council and say they have caused this infringement and say that scheme should be wound up. It would only take a letter to do that.

“The evidence is quite sufficient for that. That would be a start and that could be publicised.

“I am not saying the CMA should investigate every scheme, but it would be justified to look into some of the schemes and find out how they were set up.

“Find out if these schemes are causing infringements. If they are, the solution is simple: a letter to the local council saying to stop doing it.”

The CMA reiterated, however, that it would continue to offer guidance rather than clamping down on individual councils.

Griffiths, who has emerged as a strong champion of the drinks retailing industry in recent years, said he believes there to be an increase in the schemes across the country and feels that the CMA is refusing to act because it has not had enough complaints.

OLN joins him in urging any retailers, suppliers, wholesalers or consumers affected by these schemes to complain to the CMA. Email for advice on how to do so.

We will continue to cover this issue online, and go into greater detail in the next print issue of Off Licence News. 

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