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Brussels, 26 February 1998

The European Commission sets out its provisional position on Spring's "new" pub leases

The European Commission proposes to grant an exemption to the "new" standard pub leases used by Spring Inns Limited (UK). Through the publication of its initial views in the Official Journal (see OJ C 61 of 26/2/98), the Commission invites all interested third parties to submit their observations before finally deciding on the issue.

Spring Inns Limited (Spring) is a company which acquired in May 1996 the beneficial interests in 1,406 Inntrepreneur pubs on standard Inntrepreneur pub leases.

In February/March 1997 Spring introduced a new lease and offered substantial discounts to its lessees for their beer purchases. In view of the substantially reduced price differential for the beer price paid between the tied Spring lessees and individual free-trade pub operators, the Commission considers that an exemption is merited.

The new Spring lease is almost identical to the "new" Inntrepreneur lease for which the Commission announced in December 1997 its intention to exempt (see OJ C 374/11 of 10/12/97 and IP/97/1056). With regard to disputes concerning the validity of the "old" lease, the Commission indicated in press release IP/97/1056 that these matters can now be pursued before the national courts.

The proposed exemption would, just as for the "new" Inntrepreneur lease, cover the period from the introduction of the new Lease until March 28, 1998, the end date of the contract whereby all the beer sold by Spring to its tied lessees had to be exclusively purchased from Scottish & Newcastle.

In September 1997, The Grand Pub Company Limited (GPC), a company set up by the Japanese investment bank Nomura, entered into an agreement to acquire both Inntrepreneur and Spring. It has notified the Commission earlier this month that it will offer, after March 28, 1998, its tied lessees beer brands sourced from a series of brewers.

The Commission has not yet finalised its preliminary assessment of the consequences of this new sourcing policy for the application of Article 85(1) to the Spring and Inntrepreneur leases after March 1998. However, it has indicated (see IP/97/1056) that if other national and foreign brewers obtain an easy access to the 4,000 GPC pubs, it is unlikely that the lease will fall under Article 85(1), as it would no longer be a significant contributor to the foreclosure of the UK on-trade beer market.

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