'Tied houses’ go-ahead

Press, 24 October 1984, Page 32

'Tied houses’ go-ahead

PA Wellington The Commerce Commission has granted an application for Wilson Neill, Ltd, to buy two Dominion Breweries taverns on Auckland’s North Shore to promote competition despite a restrictive.- “tied-house” arrangement.

The two taverns are the DB Valley Inn Tavern and the DB Milford Marina Hotel. The Commission says the proposal is, “on the whole, not contrary to the public interest.” It has recognised Wilson’s “good competitive record elsewhere” and sees it as a new entrant to the liquor retail market on the North Shore. The Commission has reservations about the tie whereby Wilson Neill is required to stock DB draught beer on tap exclusively, saying it may lessen consumer choice, contribute to hindering new entrants into the brewing industry and result in lack of price competition generally. Reservations have also been expressed about a buy-back arrangement where if Wilson Neill does not honour the tie obligations, DB has the right to buy back the premises. r ‘DB could, if it wished, control the sale of its products through the outlets indefinitely.’ 7 The Commission says that if it prohibited the ties, it is likely DB would retain control

of the. outlets. This would lose the benefit of the increased competition from Wilson Neill. In any case, the Commission had no way of requiring Lion to stock DB draught beer in its North Shore outlets.. This is why the Commission says it would prefer a broad-based review of ties in the liquor industry, rather than in this specific instance. In looking at the tying arrangements, which are widespread in the liquor industry, the Commission says if a new brewery did start business in New Zealand, it might have considerable difficulty finding outlets for its product,.